China's biggest banks pledged to continue their support for the economy by increasing loans and keeping an eye on credit quality as the Congress of the ruling Communist Party gets underway.
Five of the biggest Chinese banks by assets — China Construction Bank Corp., Industrial and Commercial Bank of China Ltd., Bank of China Ltd., Agricultural Bank of China Ltd. and Bank of Communications Co. Ltd. — in separate statements affirmed their commitment to support the real economy as they seek to contribute to the country's economic development. The Oct. 16 statements coincided with the start of the Chinese Communist Party's 20th National Congress, where President Xi Jinping outlined his government's vision for the country over the next five years.
ICBC said it "will thoroughly implement the spirit" of the government's policies, adding that it will also bolster support for the real economy, continue to maintain sound business development and contribute to economic development.
The world's biggest lender in terms of assets said its domestic yuan loan balance for the nine months ended Sept. 30 increased 2.2 trillion yuan from the end of 2021, as it maintained a year-over-year increase in incremental loans for each consecutive month, with a more balanced and effective pace of delivery. Loans in 2022 have outpaced the increment in 2021 by 457.3 billion yuan, it added.
Addressing nearly 2,000 delegates at the start of the weeklong meeting, President Xi reiterated his government's push for common prosperity that defines the nation's priorities across economic, environmental and social policies at both the national and local levels to narrow the wealth gap. The common prosperity goals, first outlined in 2021, focus on alleviating systemic inequalities and are seen as the new transformational path for the country's development in coming years.
Helping hand
Banks have been encouraged to increase lending as the economy slows. GDP grew 2.5% year over year in the first half, compared with 8.1% for 2021. The International Monetary Fund said in its October World Economic Outlook report that it expects China's GDP to grow 3.2% in 2022, lower than its previous forecast of 3.3%. Growth is projected to recover to 4.4% in 2023, the report added.
China's potential growth may average between 4.0% and 4.5% this decade, according to an Oct. 16 UBS report. The report noted that President Xi underlined "high quality development" as the government's top task, which could dispel market concerns that the Chinese government no longer cared much about economic growth.
China Construction Bank said its yuan loans increased by 2.1 trillion yuan in the first nine months of 2022, outpacing the bank's total net loan increase of 1.939 trillion yuan in 2021. The bank said its operating results for the first three quarters were in line with management expectations and it continued to rank top among peers in terms of core indicators such as return on assets, capital adequacy and net interest margin.
Bank of Communications said its yuan loans rose 10.63% year over year in the nine months ended Sept. 30, while its nonperforming loan ratio at the end of the third quarter was lower than at the end of June. Meanwhile, Bank of China said it "made remarkable achievements and sustained sound growth of total loans" with customer loans up 10.78% in the nine months ended Sept. 30.
