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Foreign banks in China report 12% drop in lending
By Zhang Fengming |
June 22, 2011, Wednesday
|
Online Edition
Online Edition
THREE quarters of overseas banks in China said the tightening monetary policy has curbed their loan growth, an industry survey said today.
"The majority of overseas banks in China said the tightening measures have had a negative impact on their lending business," said PricewaterhouseCoopers in a survey today.
Tight liquidity, the need to keep the loan-to-deposit ratio under 75 percent by the end of this year and credit control by the regulators are quoted as the three major brakes on overseas banks' loan growth.
PwC conducted the survey on chief executives and top bankers of 42 overseas banks in China between April and May. The respondents accounted for the bulk of overseas banks in China in terms of assets. The survey has been held annually since 2005.
China is tightening its monetary policy this year to curb a credit-driven inflation. Since October, China has raised interest rates four times and raised the reserve requirement ratio nine times, to raise lending cost or freeze capital from lending.
Banks in China issued 17.6 trillion yuan (US$2.7 trillion) of new yuan-backed credits in 2009 and 2010. New yuan loans totaled 3.6 trillion yuan in the first five months of this year, down 12 percent from the same period last year.
Inflation rose 5.5 percent in May to a 34-month high.
Regulatory environment, high turnover rate and competition from Chinese competitors are the three main challenges for overseas banks in China. About 75 percent of respondents said their turnover rate was over 10 percent in 2010.
Despite the slowdown in loans, overseas banks still projected strong revenue growth this year. About 70 percent of respondents forecast revenue growth of more than 20 percent.
Overseas banks are also seeking merger and acquisition opportunities in China. Last year their combined market share in China was 1.8 percent, up from 2009's 1.7 percent. Their assets grew 29 percent in 2010 to 1.7 trillion yuan.
"The majority of overseas banks in China said the tightening measures have had a negative impact on their lending business," said PricewaterhouseCoopers in a survey today.
Tight liquidity, the need to keep the loan-to-deposit ratio under 75 percent by the end of this year and credit control by the regulators are quoted as the three major brakes on overseas banks' loan growth.
PwC conducted the survey on chief executives and top bankers of 42 overseas banks in China between April and May. The respondents accounted for the bulk of overseas banks in China in terms of assets. The survey has been held annually since 2005.
China is tightening its monetary policy this year to curb a credit-driven inflation. Since October, China has raised interest rates four times and raised the reserve requirement ratio nine times, to raise lending cost or freeze capital from lending.
Banks in China issued 17.6 trillion yuan (US$2.7 trillion) of new yuan-backed credits in 2009 and 2010. New yuan loans totaled 3.6 trillion yuan in the first five months of this year, down 12 percent from the same period last year.
Inflation rose 5.5 percent in May to a 34-month high.
Regulatory environment, high turnover rate and competition from Chinese competitors are the three main challenges for overseas banks in China. About 75 percent of respondents said their turnover rate was over 10 percent in 2010.
Despite the slowdown in loans, overseas banks still projected strong revenue growth this year. About 70 percent of respondents forecast revenue growth of more than 20 percent.
Overseas banks are also seeking merger and acquisition opportunities in China. Last year their combined market share in China was 1.8 percent, up from 2009's 1.7 percent. Their assets grew 29 percent in 2010 to 1.7 trillion yuan.
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