Speakers:
Guo Shuqing, chairman of China Banking Regulatory Commission (CBRC),
Wang Zhaoxing, CBRC vice chairman,
Cao Yu, CBRC vice chairman,
Yang Jiacai, assistant to CBRC chairman

Chairperson:
Hu Kaihong, spokesperson of the State Council Information Office

Date:
March 2, 2017

Hu Kaihong:

Ladies and gentlemen, good morning. Welcome to our press conference. In the past few weeks, we have invited the heads of many government departments to brief you on China’s economic and social development.

Today, we have Mr. Guo Shuqing, who has just taken up his post as chairman of the China Banking Regulatory Commission (CBRC). He will explain how the banking industry is supporting supply-side structural reform, and then take your questions. We have also with us the two CBRC vice chairmen, Mr. Wang Zhaoxing and Cao Yu, and the CBRC chairman’s assistant, Mr. Yang Jiacai.

Guo Shuqing:

First, please allow me to make a general introduction of the banking industry’s reform, development and surveillance works. Later, I’ll take your questions.

In 2016, the banking industry completed all its tasks of the year and ensured a good beginning for the implementation of the 13th Five-Year Plan (2016-2020).

By the end of 2016, the Renminbi and foreign currency assets of Chinese banking sector reached 232.25 trillion yuan, up 15.8 percent year-on-year. The growth rate was 0.13 percentage points higher than the previous year. The balance of deposits and loans increased in a stable way. At the end of the year, the balance of Renminbi and foreign currency loans totaled 112.06 trillion yuan, increasing12.7 trillion yuan, or 12.79 percent, from the beginning of the year. The balance of Renminbi and foreign currency deposits was 155.52 trillion yuan, a gain of 15.74 trillion yuan, or 11.27 percent. Asset quality remained stable. The non-performing loan rate was 1.91 percent, down 0.02 percentage points on the year; net profits of the banking industry exceeded 2 trillion yuan. Regarding commercial banks, the non-performing loan rate was 1.74 percent, up 0.07 percentage points; net profits totaled 1.65 trillion yuan, up 3.54 percent; the average return on the asset and capital ratios remained basically unchanged, registered at 0.98 percent and 13.38 percent respectively. The banking industry is now better prepared to handle risk. The loan loss reserve, the non-performing loan provision coverage ratio, the non-performing loan provision ratio and the capital adequacy ratio of commercial banks remained basically unchanged at 2.67 trillion yuan, 176.4 percent, 3.08 percent and 13.28 percent respectively. Generally, the systemic risks of the banking sector remained under control.

This year, we will fully implement the guiding principles of the Central Economic Work Conference. Specifically, we will carry out four tasks.

First, we will be more active in supporting and implementing supply-side structural reform.

Regarding market-based debt-for-equity swaps, currently, the total value of such contracts has exceeded 430 billion yuan. The value of contracts implemented surpassed 40 billion yuan. In the next stage, we will increase policy support, enhance professional guidance and strengthen risk monitoring to promote further progress.

We will remain active but prudent in regard to the trial program to allow commercial banks to participate in combined debt-equity investments into startups and small businesses.Based on the special national conditions, we will explore new financial service modes for technological innovation companies. We will also support trial banks to diversify their service modes according to their internal conditions.

The banking sector will play a more active part in supporting supply-side structural reform of the agricultural sector. More loans will be given to rural areas, farmers and small and micro-sized enterprises. The efficiency of targeted poverty alleviation and financial inclusion will be improved. Weak links of financial services will be fixed.

Second, we will further improve service to real economy. We will continue to improve banking services and tackle the bureaucratic work style of some banks.

Third, we will take firm actions to stop illegal financial practices. According to the requirements of the Central Economic Work Conference, we will attach greater importance to risk control and prevent all kinds of systemic financial risks. Currently, cross-market financial products have become a major problem due to their complicated and unpredictable nature. The emergence of such products should be blamed on lack of an appropriate regulatory mechanism. Without a well-established mechanism, the banking industry will be exposed to grave risks. Therefore, we must review existing regulations, make new ones where necessary, revise outdated ones and abolish those that are deemed unsuitable.

Fourth, we will comprehensively improve banking personnel’s quality. One has to be very strong to strike iron. It’s the job for the banking industry to handle various risks, and it’s the CBRC’s duty to monitor management risk. We must increase the awareness of risks and always be ready to deal with worst-case scenarios. Only in this way can we fulfill our duty as a regulator.

That’s all I want to say. Thank you.

Hu Kaihong:

Thank you, Mr. Guo. Now, the floor is open to questions. Please identify your media outlet before raising questions.