China's Banking Profits May Slide This Year.

　　 S & P China's banking industry outlook was released on 13 th. It is believed that China's banking sector may face setbacks in 2012 after years of strong growth. Affected by the domestic economic slowdown, the real estate market adjustment and the possible decline in loan pricing, bank profits may fall in 2012, and bad loans will rise moderately. In an interview, Liao Qiang, rating director of the S & P financial institutions, said that the deposit reserve rate during the year will remain the central tool of the central bank's monetary policy regulation. It will not be surprising that the deposit rate will be reduced to 19%. The proportion is about 150 basis points at present.

Liao Qiang said that the financial data of the mainland in February showed that the supply constraint of credit is not a major problem, but there will be a marked weakening of demand. He believes that when the credit demand slows down, it will also bring about the adjustment of loan pricing. In the past three months, the central bank has lowered the deposit reserve ratio for the 2 time. It has already indicated that the deposit rate will be used as a major tool. He believes that with the lowering of the deposit rate, liquidity will rise. In the case of slowing demand, the loan pricing level will decrease.

The report is expected, due to 2012. Credit losses A rise in net interest margins will result in a decline in profitability of China's banking sector. This year, the average return on assets (ROAA) in China's banking sector may drop to 0.8%-1%, which is 1.3% in 2011. For the prediction of credit losses, Liao Qiang believes that if the loan of local government financing platform does not appear to be large scale this year, the bad rate of the entire banking industry will increase by 2-3 percentage points. At the same time, with the increase in bank financing costs and the decrease in credit demand, the net interest margin will also be narrowed this year and is expected to be back to 20-30 basis points.

The report also pointed out that the overall liquidity of the banking system will remain stable. Banking It can cope with the downside risks of credit quality. However, the report also believes that the risk of liquidity tension triggered by the policy may be a major trigger for negative rating actions. If the economy slows down sharply and the jump of bad loans is more serious than expected, it may also lead to a downgrade.