ICBC : Industrial and Commercial Bank of China (1398)

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^^ I don't think China liberalised the deposit rate fully yet. Therein lies the structural problem to your scenario

And people forget China is still communist. When bad times come, the big 4 loan book may not actually shrink especially if government reduce RRR from 20%

(01-09-2014, 08:18 AM)specuvestor Wrote: U increase loan quantum the NPL tends to increase, but not the NPL ratio

I think the chinese govt stance had been made clear in the last year of wen/ Hu admin. They are making too much and thats one reason why the financial deregulation presumably is accelerated. IMHO the govt will tighten regulation on these non bank funds because it will pose a systemic risk, and Xi/Li admin is much more proactive than their predecessor.

(01-09-2014, 08:43 AM)GFG Wrote: The NPL ratio does increase too, because as u chase more loanees, inevitably you have to consider those with lower credit profile
Esp if the loans granted by ICBC is growing at a rate higher than the total loans in the economy

Generally in a good economy u can increase your loan book without increasing NPL ratio. So sometimes NPL ratio has a lagging effect only when economy turns

Plus NPL formation is related to loans growth but they may not be a direct correlation, very much dependent on the economic or sector risk. Mortgage is a good example during the bubble years that NPL for new mortgage are very low. Let's see how it goes next few quarters as UOB has given a glimpse.
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward

Think Asset-Business-Structure (ABS)
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RE: Industrial and Commercial Bank of China (1398) - by specuvestor - 01-09-2014, 11:31 AM

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