Total Assets in China's Banks Near USD30 Trillion, 2.8 Times National GDP, Moody’s Says

Yicai

2017-02-07

(Yicai Global) Feb. 7 -- Total assets in the Chinese banking sector hit CNY199 trillion (USD30 trillion), or 2.8 times national gross domestic product, as of Dec. 31, 2015, according Moody’s Investors Service

Between 2009 and 2015, total assets in China’s banking industry grew at a compound annual growth rate of 17 percent, higher than the nominal gross domestic product’s 12 percent rate over the same period. The five state-owned commercial banks -- Industrial and Commercial Bank of China (ICBC) [SHA:601398], Bank of China (BOC) [SHA:601988, China Construction Bank (CCB) [SHA:601939], Agricultural Bank of China (ABC) [SHA:601288] and Bank of Communications (BankComm) [SHA:601328] -- make up 39 percent of the sector’s total assets. As of June 30, 2016, outstanding loans and deposits at the five banks accounted for 47 percent of the country’s total, state-owned news agency Xinhua reported yesterday, citing New York-based Moody’s.

China’s largest bank, ICBC, represented 11 percent of total assets owned by institutions at last year’s midpoint, and makes up the country’s largest proportion of bank lending and deposits.

At the end of 2015, Chinese bank loans were highly diversified with personal loans having the most exposure at 24 percent of total lending. Lending to manufacturers followed at 18 percent and lending to retailers came in third, making up 13 percent.

The potential impact of risks in the banking sector is manifested by China’s sprawling banking system and growing interbank loans. The rapidly expanding shadow banking market and its connections with banks points to the possibility of risks building up, according to the report. However, the risks are offset in part by Chinese banks’ abundant capital reserves and relatively high levels of provision for loan losses. By maintaining sufficient foreign exchange reserves, the country is well positioned to guard itself against external risks.

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