CNBC:
How is the demand for loans from real estate developers? In particular, how has the demand been affected following the introduction of the policy extending support for the stable and healthy development of the real estate market?
Zou Lan:
As you all know, some real estate developers long operated under the conditions of "high leverage, high debt, and high turnover." Unlimited expansion of assets in terms of land, ongoing construction projects, and a diverse range of operational assets has resulted in high levels of debt. When we break down the sources of their debts, we find that nearly 70% comes from advanced personal housing payments and project funding from upstream and downstream enterprises. Financial liabilities only account for 31%, with less than half of this constituted by bank loans.
In terms of the real estate credit structure of banks, the outstanding real estate loans stand at over 50 trillion yuan, with outstanding individual housing loans approaching 40 trillion yuan. Most people purchase homes for personal use and depend on household incomes to repay their loans monthly, with the non-performing loan ratio remaining consistently below 0.5%. Regarding individual housing loans for pre-sold homes with delayed delivery, due to existing laws, priority is given to safeguarding the interests of homebuyers. These loans might face certain risks, but they constitute a relatively small proportion of the total amount and their risks are under control. Outstanding real estate development loans amount to about 13 trillion yuan, among which the outstanding property development and government-subsidized housing development loans reach approximately 6 trillion yuan and their repayment is ensured. The loans to real estate developers amount to about 6 to 7 trillion yuan. As some of these real estate developers encounter financial problems, the non-performing loan ratio has increased slightly, but the loans to real estate enterprises account for a very small proportion of total bank loans.
Since the latter half of 2021, in accordance with the arrangements of the Party Central Committee and the State Council, financial authorities have collaborated with relevant departments to provide stronger support for the timely delivery of pre-sold homes. They have maintained stability in major financing channels for real estate enterprises and accelerated efforts to defuse risks in the real estate sector.
First, financial authorities have ramped up financial support to ensure the timely delivery of pre-sold homes, providing two batches of special loans totaling 350 billion yuan. They've established a program that offers special loans worth 200 billion yuan to ensure the timely completion of pre-sold housing projects. In addition, they guided commercial banks to proactively provide supporting financing to effectively drive the resumption of construction for local projects.
Second, financial authorities have maintained the stability of major financing channels such as bonds and equity. Since November last year, we have utilized the instruments for supporting bond financing for private businesses, providing credit enhancement support for private real estate enterprises to issue bonds totaling 26 billion yuan. Since the China Securities Regulatory Commission optimized policies for real estate enterprises to go public, numerous enterprises have benefitted from equity financing support.
Third, financial authorities have spearheaded the transformation and development of the real estate sector. The PBC and the National Administration of Financial Regulation have formulated the "Opinions on Financial Support for the Development of the Housing Rental Market," providing diversified, full-life-cycle financial services for home rentals. Financial authorities have taken steady strides in advancing the 100 billion yuan special loan program to support home rentals, and have piloted the program in cities including Jinan and Zhengzhou.
The real estate market has shown a stable trend since the beginning of this year, but it will still take some time to gradually digest the risks accumulated by some real estate companies. Given the current situation in the real estate market, the PBC and the National Financial Regulatory Administration recently issued a joint notice, extending the expiration dates of two policies with applicable periods in the "16 Financial Measures" to the end of December 2024. This aims to guide financial institutions to continue providing refinancing to real estate enterprises and to increase financial support for project completion and delivery. Simultaneously, to meet the needs of completing and delivering projects, the deadline for the 200 billion yuan loan support plan has been extended to the end of May 2024.
Next, the PBC will thoroughly implement the decisions and arrangements made by the CPC Central Committee and the State Council. We will adhere to the principle that "houses are for living in, not for speculation," and cooperate with relevant departments and local governments to solidly carry out the work of completing and delivering housing projects, ensuring people's livelihoods and maintaining stability. We will meet the reasonable financing needs of the industry, and continue to create a favorable financial environment for the orderly disposal of industry risks. Given the profound changes in the supply-demand relationship in China's real estate market, there is marginal room for optimizing the policies introduced during the past's long-term overheating stage. The financial sector will actively cooperate with relevant departments to strengthen policy research, adopt targeted measures based on different cities, improve policy precision, better support people's demand for buying their first home or improving their housing situation, and promote stable and healthy real estate market development. Thank you!
