CMG:
I would like to ask, how did the banking and insurance industries perform overall in 2023, especially in the aspects of risk and stability? And what predictions does the NFRA have regarding their development prospects this year? Thank you.
Liu Zhiqing:
Good afternoon. Thank you for your questions. Here, I will give you a brief introduction about the stable operation and overall performance in the banking and insurance sectors of last year. The total assets and main business in these two industries grew steadily. As of the end of 2023, the assets of financial institutions in China's banking sector grew 9.9% year on year to 417.3 trillion yuan. China's yuan-denominated loans rose by 22.75 trillion yuan, and the year-on-year increase was 1.31 trillion yuan more than registered in the previous year. The total debt stood at 383.1 trillion yuan, up 10.1% year on year. New yuan deposits hit 25.74 trillion yuan, down by 510.1 billion yuan from the previous year. By the end of last year, insurance company assets increased 10.4% year on year to 29.96 trillion yuan. Approximately 25.4 trillion yuan in financing support was provided for economic and social development through bonds, stocks, equity investment, and other measures, increasing 2.9 trillion yuan compared with the beginning of last year. Claim and benefit payments reached 1.89 trillion yuan, up 21.9% year on year. Agricultural insurance provided 4.98 trillion yuan to guarantee reductions in agricultural development risks.
Asset quality remained stable generally. At the end of 2023, the outstanding balance of NPLs of financial institutions in China's banking sector was 3.95 trillion yuan, up by 149.5 billion yuan compared with the beginning of last year, according to preliminary statistics. The NPL ratio was 1.62%, and the ratio of loans overdue more than 90 days to NPLs stood at 84.2%, remaining at a relatively low level. Last year, China's banking sector disposed of 3 trillion yuan in non-performing assets.
The ability to defuse risks has been strengthened. According to preliminary statistics, commercial banks had accumulated net profits of 2.38 trillion yuan in 2023, up 3.24% year on year. The balance of loan loss provisions reached 476.8 billion yuan, and the provision coverage ratio was 205.1%, staying at a relatively high level. The capital adequacy ratio of commercial banks reached 15.1%, and the tier 1 CAR was 10.5%. Among those, the capital adequacy ratio of large commercial banks reached 17.6%, and the tier 1 CAR was 11.7%. The leverage ratio of commercial banks was 6.8%, remaining stable. China's insurance sector demonstrated adequate solvency. As of the end of 2023, the comprehensive solvency ratio of the insurance sector was 196.5%, and the core solvency ratio was 127.8%. Among those, the comprehensive solvency ratio and the core solvency ratio of property insurance companies were 236.5% and 204.3%, respectively. The comprehensive solvency ratio and the core solvency ratio of life insurance companies were 186.2% and 110.3%, respectively.
The liquidity of Chinese banks remained sound. At the end of 2023, the liquidity coverage ratio of banks with total assets no less than 200 billion yuan was 151.6%, with a net stable funding ratio of 125.5%. The high-quality liquid assets adequacy ratio of banks with assets below 200 billion yuan was 269.4%. The liquidity indicators of all kinds of institutions remained at a relatively high level. The ratio of various deposits to total liabilities reached 69.2% due to banks' steady capital sources. In 2023, the net cash flow from insurance companies' operating activities hit 1.71 trillion yuan.
Looking ahead to 2024, the fundamentals of China's economy remain unchanged, and they will maintain long-term growth. Thanks to an increasingly improved industrial foundation, factor endowments, and innovation capacity, new driving forces will be formed in new urbanization, green transformation, and other fields, which will inject strong impetus into the banking and insurance industries and provide more opportunities rather than challenges. The banking industry is expected to maintain steady growth momentum, with institutional and structural regimes becoming more reasonable and financial resource allocation also improving. In the past three years, the average growth rate of total assets in China's insurance industry remained at 8.7%, showing a sound momentum. The industry contains huge potential and strong capability to serve economic and social development, which will play more effective roles as both an economic shock absorber and a social stabilizer. Thank you.
