When the credit honeymoon ends

A rope tied two grasshoppers. The stimulus package is largely carried out by local governments and banks, and the fiscal risks of local governments are not negligible (see this newspaper yesterday).　　And how big is the risk of bad loans to banks? Analysis that the real economy under the impact of the downturn, the banking sector in the last 4 quarters began to withstand the upward pressure of non-performing loans.　　At the end of last year, the high rate of credit growth has further increased the risk of bad debts, and because of spreads narrowed, profits slipped. However, in the short term, the risk of non-performing loans will not be apparent because of the low non-performing loan balance and non-performing loan ratio and the increase in provision coverage.　　Whether the banks will have serious bad debts in the long run depends on the changes in the quality of the bank's assets as a result of our economic recovery and whether the government has imposed a requirement on banks to lend to shoddy projects or businesses. Non-performing loans began to rise late last year as credit growth began in the 4th quarter of last year and continued into the 1th quarter of this year, with a slight drop in growth this April. At present, the industry generally believe that high credit growth is unsustainable, but this year will continue to maintain growth trend.　　It is hard to say how much bad loans the whole process will bring to banks, but it is difficult to assert, but to look at the bank's data from the end of last year. In the 4 quarter of 2008, as monetary policy was fully relaxed, bank assets expanded rapidly. At the end of 2008, the total assets of 14 listed banks reached 3.4911 trillion yuan, an increase of 17%, and the loan size increased 16.9%.　　The overall provision coverage rate of listed banks was 134.4%, up 26% from the beginning of the year. For the above performance, Wanguo's evaluation is "Iffong". The so-called abundance, refers to the expansion of scale and effective tax rate decline. The "apology" is a substantial increase in the provision of funds.　　This includes both overseas investment depreciation preparation and the improvement of provision coverage to cope with the possible deterioration of asset quality. Why increase the provision coverage? This is because, in the 4 quarter of the macroeconomic shock in the context of the impact of the quality of the bank's assets, the majority of banks non-performing loan balances have risen to varying degrees, individual banks of the bad rate obviously rebound.　　Wanguo researchers analyzed that, although banks compared with the beginning of 2008, the Non-performing loan rate fell, but in fact, mainly benefited from the first three quarters, the fourth quarter was poor performance. Thus, in the 4th quarter of last year, banks have begun to bear the pressure of rising non-performing loans.　　In the first quarter of this year, in Wanguo's view, bank net profits actually fell significantly. Data show that the blowout of credit in the first quarter brought about the super speed expansion of scale. In the quarter, the total assets of 14 listed banks reached 39.384 trillion yuan, an increase of 25.3%, which grew by 12.8% at the beginning of the year. But as the volume rises exceeded expectations, prices fell more than expected.　　1 quarter of the listed bank interest net income fell Year-on-year-10%, the profit before the fall-4%, net profit fell to 8.5%. Wanguo analysis, the overall interest margin of listed banks in the 1 quarter was narrowed by about 8 compared with the same period in 20080 basis points, which narrowed by about 65 basis points over the year 2008. Such a rise in prices has prevented banks from achieving a premium, with the net interest income of most banks in the 1 quarter negative.　　Taking into account the fact that banks have reduced the cost of operating costs in order to smooth performance, Wanguo calculates that the actual net profit decline should be greater than 8.5% of the disclosure of the statement, and up to 15%.　　The risk of non-performing loans will not appear in the short term however, the analysis that, for the moment, the quality of the bank's assets remain stable, short-term non-performing loan risk does not appear.　　According to the data, the Non-performing loan balances of listed banks in the 1 quarter were slightly lower than at the beginning of the year, with an adverse rate of around 1.74%, which was about 30 points lower than the beginning of the year, and the provision coverage rate continued to rise by about 140%. Although the banking sector in the 1 quarter showed a double drop in non-performing loan balances and non-performing loan rates, Wanguo that the follow-up would be as likely to be under pressure as in the 4 quarter. In particular, after a large number of last year's extension of the loan expires, there will be some non-performing loans.　　Therefore, the annual non-performing loan balance is expected to increase slightly and the non-performing rate will continue to decline. Wanguo stressed that the small fluctuations in the quality of these assets within the controllable limits of the bank, the overall deterioration of assets will not occur.　　Moreover, the authorities have noted the risk of taking precautions, and the CBRC has raised its bank reserve coverage to 150% per cent, forcing banks to prepare for possible future non-performing loans. According to the current characteristics of project loan and its relationship with government finance, Standard Chartered also believes that non-performing loans will not appear in the short term. The reasons are as follows: 1. At present, the type of project loan is more than one-time repayment of loans. In other words, during the loan period only pay interest, one-time repayment of the principal. Therefore, the borrower's repayment ability deterioration does not necessarily lead to the loan classification is reduced.　　The longer the average loan term, the harder it will be to find the problem loan.　　2. When the loan expires, the option of rollover is postponed, delaying the discovery time of the problem loan. 3. Most loans have mortgages, and the recovery rate varies depending on the industry and the specific loan business. Other loans are secured. However, the current recovery rate of bad debts suggests that the real value of collateral and collateral is often inconsistent with its book value.　　The recovery rate for the current problem loans is only about 20% to 30%, well below the recovery rates required by the 50%-80% mortgage.　　4. The criteria for measuring reduced-value loans are too broad, which means that the branch level is still likely to disguise the problem loan. 5. The problem will be compounded if local governments are loan guarantors.　　In this case, banks are more reluctant to make the loan a problem, and the local government will intervene and look for a private solution. Government forced bank loans will increase the hidden danger of bad debts short-term risk can avoid, long-term hidden trouble?　　It is interesting to find that Chinese and foreign institutions have different views on this. Wanguo that with the recovery of our economy, the quality of the bank's assets will gradually increase and profits will shift from decline to growth. ShenyinWith the increasing number of projects, the structure of bank credit will be optimized gradually, the researchers from all over the nations analyzed. Signs of economic recovery will also shift the banks ' lending to small and medium-sized businesses. In addition, the deposit of the basic end of the regular, follow-up is expected to reproduce the trend of demand.　　The spreads for most banks are expected to bottom out in the first half and a certain rebound in the second half. Also optimistic is Citic Securities, whose analysts say our bank's assets are generally healthy and the economic forecasts are clear and the risks are fully manageable.　　There is no need for pressure tests on banks, as in the United States (Figure 1-4).　　However, the three international rating agencies, such as S & P, Moody's and Fitch, have been warned that the potential risks of China's banking industry are high and the outlook for asset quality is not optimistic. A report by Fitch in early January entitled "China's Banking: a shift in the credit cycle and a pressure on asset quality" suggests that credit problems in China's banking sector could take a long time to emerge, with a negative outlook on asset quality.　　Moody's also downgraded the Chinese banking outlook to a "negative" view that it would face a fall in asset quality, increased non-performing loans and a sharp reduction in profits by 2009. The increase in credit risk caused by the downturn in the real economy in 2009 will lead to higher bank non-performing loans, the agency said.　　Moreover, if the Chinese government intervenes too much in the bank's credit flow and management standards, it will further increase the bank's credit risk.　　Liao Qiang, the bank's analyst, said that the government's monetary policy to guide the delivery of money is understandable, the current central banks and other departments to the Credit Delivery window guide is not too much, but if the government forced to demand banks for corporate loans, it will have a negative impact on banks.　　Liao Qiang further said that if businesses could get loans easily and continue to expand their financial leverage, overcapacity would be more pronounced, leading to bad debts for businesses and banks, and if the government asked banks to lend to companies that did not have repayment capacity, it would cause problems such as bad loans. Newspaper reporter Sinling