Loan growth, bond investments confirm strong support in key areas
The performance of China’s banking and insurance sectors in the first half of the year confirms that they have continuously improved the quality and efficiency of their financial services to better serve the real economy, regulators said on Wednesday.
The real economy refers to the part of the economy that produces goods and services.
Regulators also said commercial banks and insurers had succeeded in containing overall risks in the first half of the year.
Their comments are corroborated by data from the first half of the year. China’s new yuan loans totaled 12.7 trillion yuan ($ 1.9 trillion), up 667.7 billion yuan year-on-year.
New investments by banking and insurance institutions in bonds reached 3.4 trillion yuan, providing reasonable funding for the real economy, said Liu Zhongrui, deputy director of the statistics, information and technology department. China Banking and Insurance Regulatory Commission risk oversight.
Increasingly significant financial resources have been directed to key areas and weak links in the economy, to further support micro and small enterprises, rural revitalization, manufacturing, technological innovation and development of the economy. low carbon companies.
In the first six months, the growth of loans to small businesses, with total credit lines of 10 million yuan per borrower, remained above 30% year-on-year.
At the end of June, loans to the manufacturing sector increased by 1.7 trillion yuan since the beginning of this year. Growth has remained above 10% year-on-year for the past 14 consecutive months, Liu said.
The banking sector has also stepped up support for the transition to a green economy after China announced its goal of peaking carbon dioxide emissions by 2030 and achieving carbon neutrality by 2060. .
At the end of the first quarter, the outstanding green loans offered by 21 major banks nationwide stood at 12.5 trillion yuan, or 9.3 percent of total loans.
More than 70 percent of green loans have gone to the green transport, renewable energy, energy conservation and environmental protection sectors, said Ye Yanfei, inspector of the CBIRC’s policy research office. .
It is estimated that green loans from the 21 major banks will reduce standard coal consumption by more than 300 million metric tonnes and reduce carbon dioxide equivalent emissions by over 700 million tonnes per year, according to the CBIRC.
The banking sector will explore whether to use a carbon allowance as collateral for loans and to raise more private capital to invest in green assets through asset-backed securities, Ye said.
In the first half of the year, the Chinese banking sector effectively contained risks in key areas and overall credit risk remained controllable. Its NPL ratio stood at 1.86% at the end of June, down 0.08 percentage point from the start of this year.
“The banking sector gave up an all-time high of 3.02 trillion yuan of non-performing assets in 2020. It continued to sell 482.7 billion yuan of APM in the first quarter, which exceeded the amount of the same period last year. We expect this NPA elimination figure in the first half of the year to also exceed the same period last year, ”Liu said.
He noted that China’s economic recovery from the impacts of the COVID-19 pandemic is still uneven and the foundations for the recovery are not yet solid. Some businesses, especially small businesses and sole proprietorships, still face some difficulties.
Due to the lag effect of non-performing exposures, the banking sector is still facing the pressure of an increase in non-performing loans as China abandons the policy of deferring payments on principal and interest on loans to a number of micro, small and medium enterprises.
“The CBIRC urged banks to conduct a comprehensive risk assessment, make sufficient provision for loan write-downs proactively, develop plans to deal with a rebound in NPLs, and step up efforts to sell off loans. non-performing loans. The regulator has also helped banks to replenish their capital in several channels to strengthen their risk resilience capacity, ”he said.