In Focus
RETAIL BANKING | Staff Reporter, China

Chinese banks' 1H17 asset growth significantly slower than in the past decade

Assets grew by only 4.4%.

The 16 Moody's-rated listed banks reported asset growth of only 4.4% in the first half of 2017, which was markedly slower from the double-digit growth in the past decade. Growth was even negative for some joint-stock commercial banks. In particular, total assets of two banks shrunk while those of another bank barely changed in the period.

Here's more from Moody's:

Loan balances increased by 7.3% in the first half of 2017, about the same level a year earlier. Reflecting macroeconomic stabilization, new corporate loans rebounded to 45.7% of the increase of loan balance in the first half of 2017, from 30.8% in 2016.

On the other hand, residential mortgage loans slowed as banks reacted to regulatory measures to cool the housing market and tightened their underwriting standards (see Exhibit 3). Nevertheless, three banks registered growth rates of more than 30% for mortgage loans in the first half of 2017. Mortgage loans accounted for 36.5% of the increase of loan balance in this period, 21 percentage points lower than 2016.

Declining investment in loans and receivables led the slowdown in asset growth. Most banks reported shrinkage in these investments as authorities stepped up their regulatory tightening on shadow banking and interbank activities.

Some of the reported decline of investment in loans and receivables could be reclassified into investment in available-for-sale securities. Nevertheless, the pace of growth of investment in securities, both available-for-sale and held-to-maturity securities, decelerated to 4.8% in the first half of 2017 from 14.6% a year earlier.

Loans and investments in securities are the largest components of banks' assets, accounting for 50% and 21%, respectively, of total assets.

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