INVESTMENT BANKING | Staff Reporter, China

Outstanding balance of bank-issued wealth management products in China up 9% to US$4.3t

It represents almost a fifth of bank deposits.

The outstanding balance of WMPs issued or distributed by banks has declined to RMB 28.4 trillion (US$4.3t) as of May 2017, equivalent to 19.8% of bank deposits, according to Moody's Investors Service. The implied year-on-year growth rate was 9.0% compared to 23.6% in 2016 and 56.5% in 2015.

Here's more from Moody's:

Enhanced regulatory policy measures and guidelines should further constrain the growth of off-balance sheet WMPs, which has been one of the fastest-growing components of the shadow banking sector. This is credit positive as we see these WMPs as a potential vehicle for banks to engage in regulatory arbitrage.

While the overall pace of WMP issuance is moderating, some underlying developments suggest potential risks remain.

Growth of outstanding WMPs from mid- and small-sized banks have constantly outpaced growth in their total assets since 2015. By contrast, outstanding WMPs from large state-owned banks inched down relative to their asset size in 2016.

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