China’s Banking Industry
As of end-2012, China's banking sector consisted of two policy banks and the CDB, five large commercial banks, 12 joint-stock commercial banks, 144 city commercial banks, 337 rural commercial banks, 147 rural cooperative banks, 1,927 rural credit cooperatives (RCCs), one postal savings bank, 4 banking assets management companies, 42 locally incorporated foreign banking institutions, 67 trust companies, 150 finance companies of corporate groups, 20 financial leasing companies, 5 money brokerage firms, 16 auto financing companies, 4 consumer finance companies, 800 village or township banks, 14 lending companies and 49 rural mutual cooperatives. Overall, the number of banking institutions in China's banking sector amounted to 3,747 with 3.362 million employees.
Banking assets
As of end-2012, the total assets of China's banking sector increased by RMB 20.3 trillion or 17.9 percent on a year-on-year basis to RMB 133.6 trillion; total liabilities rose by RMB 18.9 trillion or 17.8 percent year-on-year to RMB 125.0 trillion. In terms of assets, large commercial banks, joint-stock commercial banks and small- and medium-sized rural financial institutions plus postal savings bank accounted for 44.9 percent, 17.6 percent and 15.6 percent respectively.
Bank deposits and loans
As of end-2012, the outstanding balance of deposits maintained by banking institutions increased by RMB 11.6 trillion from year beginning or 14.1 percent year-on-year to RMB 94.3 trillion, among which the year-end household savings deposits grew by RMB 5.6 trillion from year beginning or 16.2 percent year-on-year to RMB 40.4 trillion; the corporate deposits rose by RMB 5.5 trillion from year beginning or 13.2 percent year-on-year to RMB 47.9 trillion. The outstanding balance of loans made by banking institutions went up by RMB 9.1 trillion from year beginning or 15.6 percent year-on-year to RMB 67.3 trillion. Short-term loans grew by RMB 5.1 trillion from year beginning or 23.3 percent year-on-year to RMB 26.8 trillion; medium-to-long term loans increased by RMB 3.0 trillion from year beginning or 9.0 percent year-on-year to RMB 36.4 trillion; consumer loans rose by RMB 1.6 trillion from year beginning or 17.6 percent year-on-year to RMB 10.4 trillion; and bill financing grew by RMB 529.4 billion from year beginning or 34.9 percent year-on-year to RMB 2.0 trillion.
Capital adequacy ratio (CAR)
As of end-2012, the weighted average CAR of commercial banks reached 13.25 percent, up by 0.54 percentage point year-on-year; and the weighted average core CAR rose to 10.62 percent, up by 0.38 percentage point year-on-year. By the end of 2012, the CAR of all 509 commercial banks exceeded the minimum regulatory requirement of 8 percent.
Asset quality
As of end-2012, the outstanding balance of NPLs in China's banking sector stood at RMB 1.07 trillion, increased by RMB 23.4 billion from the year beginning. The NPL ratio of all banking institutions registered at 1.56 percent, down by 0.22 percentage point year-on-year. With respect to commercial banks only, their NPLs declined to RMB 492.9 billion, up by RMB 64.7 billion from the year beginning, but the NPL ratio dropped to 0.95 percent, down by 0.01 percentage point year-on-year.
Risk-absorbing capacity
As of end-2012, the loan loss provisions set aside by commercial banks increased by RMB 265.3 billion from the year beginning to RMB 1.46 trillion, while their provisioning coverage ratio rose by 17.3 percentage points to 295.5 percent, indicating enhanced capacity to absorb potential risks.
In 2012, banking institutions realized an after-tax profit of RMB 1.51 trillion, representing a year-on-year increase of 20.7 percent. The Return on Equity (ROE) went down by 0.16 percentage point year-on-year to 19.0 percent, while the Return on Assets (ROA) was up by 0.02 percentage point year-on-year to 1.2 percent. The after-tax profits of commercial banks amounted to RMB 1.24 trillion, up by 19.0 percent year-on-year, with the ROE dropping 0.55 percentage point year-on-year to 19.8 percent and the ROA standing at 1.3 percent, almost the same as that of last year. The growth in profitability was mainly attributed to the increase in the size of interest-bearing credit assets.
As of end-2012, the average liquidity ratio of banking institutions increased by 3.07 percentage points year-on-year to 47.8 percent. The loan-to-deposit ratio was up by 0.74 percentage point year-on-year to 73.5 percent. The RMB-denominated excess reserve ratio of commercial banks increased by 0.42 percentage point year-on-year to 3.5 percent.
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