2014-11-16

The Losses Mount and The Depositors Leave

Bank of Communications: Time for a Withdrawal?
Slowing Chinese economy prompts rise in bad loans

金融脱媒加剧 交通银行存款流失惊人 (Shocking Deposit Drain at BoC)

China's 16 listed banks saw deposits decline 2% in Q3, but Bank of Communications saw a drop of 5.9%. The steep drop is believed to be the result of the new regulations that stop banks from attracting deposits. Banks were window dressing their quarter end regulatory snapshots by purchasing deposits in the last couple weeks of a quarter, a phenomena that was very obvious in the quarters following the cash crunch in June 2013. The banks are also hitting up against their loan-to-deposit rations as depositors pull their funds.


Good day banking may really end. Not only is the decline in profit growth, asset quality deterioration, and the trend of financial disintermediation, is exacerbated by the banks operating pressure. The third quarter, a substantial loss of listed bank deposits, including deposits highest wastage Bank, up 5.93 percent.

These data are also pessimistic listed bank shares to bring pressure. Wind's latest data show that in the 16 listed banks, 13 banks are trading below net assets. Among them, the Bank of valuation to 0.758 times the book value indicators bottom.

Bank deposits loss ratio of the third quarter amounted to 5.93%

With the financial disintermediation intensified in the third quarter, a substantial loss of listed bank deposits.

Wind data show that as of the end of September, total bank deposits 16 listed banks was 75.62 trillion yuan, compared with 77.13 trillion yuan this year's mid-year report, reducing the 1.51 trillion yuan, a drop of 1.97%. Among them, a decrease in 13 bank deposits. Loss of listed banks in deposits, the loss ratio of deposits amazing cross the line in the third quarter up 5.93%.

If you simply amount to the loss on the third quarter, the bank lost deposits topped 388.368 billion yuan deposits, followed by the loss of deposit Bank of 259.374 billion yuan, again, is the loss of CITIC Bank deposit 177.488 billion yuan. However, considering the size of funds in each row, the highest proportion of deposits compared with loss of pay lines, loss of deposit 5.93% in the third quarter, the bank's deposits lost only 2.47%.

In this regard, Everbright Securities research report said the long-term constraints Bank deposit weak business growth and affect the share price performance of late has yet to improve. "Three quarters of deposits declined mostly caused by the company deposits, showing the cross-line competition in the industry has a weak deposit, there may be a point in time due to the red end of the second quarter. Assets side, credit and interbank deposits grew steadily, but buying contracted resale and loans to other banks. Therefore, reducing deposits and loans increased, resulting in loan-to-deposit ratio to continue upward, the end of September reached 73.92% (end of June, the end of the year were 72.37%, 73.40%), approaching the regulatory red line, and there is likely to restrict credit growth. "The research reported.

Yamin Li Ping An Securities banking researcher believes that the deposit loss was mainly due to the introduction of the deposit in September deviation management approach punishment is too harsh on the degree of deviation of more than 3%, resulting in greatly reduced bank deposits in the red end of the quarter point of the impulse, " Meanwhile superimposed non-standard assets slowdown led to derive the impact of reduced deposits, deposit growth year on year basis is slowing down. "

In addition, the Internet can not be ignored financial impact, a number of banks were mentioned in the three quarterly financial measures to cope with the challenges of the Internet. Such as Ping An Bank launched the "orange bank", and that "both the Bank conform to Internet trends and customer financial needs and consumption habits change forward layout, but also to deal with a variety of Internet innovations financial challenges." The Bank said "Internet banking has brought positive response to the loss of deposit, customer diversion challenge", "efforts to attract customers, and vigorously expand the savings."

Pressure overall loan to deposit ratio close to 75% surge red Merchants Bank

Financial disintermediation, loss of deposits, these phenomena are exacerbated by the bank's loan to deposit ratio of listed pressure, a number of banks have been wandering in the regulatory red edges. In the 16 listed banks, only the Bank of China a loan to deposit ratio indicators have improved in the third quarter.

Overall, the generally higher loan-to-deposit ratio of the joint-stock banks. Wind data show that loan to deposit ratio of the top 10 high banks respectively, China Merchants Bank, Bank, CITIC Bank, Beijing Bank, Everbright Bank, Shanghai Pudong Development Bank, China Minsheng Bank, China Construction Bank, Bank of China and Huaxia Bank, respectively, 74.89%, 73.92%, 73.86%, 73.76%, 73.61%, 73.34%, 73.03%, 72.02%%, 71.65% and 70.24%, China Merchants Bank, Bank, have been approaching 75% of the regulatory red line. Compared with the mid-year, loan to deposit ratio index rose fastest three banks are China Merchants Bank, Bank of Beijing and China CITIC Bank, rose by 8.66 percentage points, 7.14 percentage points and 5.19 percentage points.

In this case, cancel the loan to deposit ratio and adjust the voice was underway. Lian Ping, chief economist at Bank said deposit growth has obviously not keep loan growth. Loan-to-deposit ratio assessment increasingly difficult to comply with the principles of market-driven allocation of resources, the phasing out of the general trend. In the assessment of the degree of deviation deposits, bank deposits is still hard to change the behavior of chase. Under this regulatory policy, bank deposits increased absorption of difficulty, do not rule out a further slowdown in deposit growth stage, difficult to effectively decrease the cost of debt, thus limiting the possibility of credit capacity.

In addition to phasing out loan to deposit ratio, Industrial Bank chief economist Lu political commissar, it is recommended that regulators should also be changed from several aspects: First, improve liquidity, namely the promotion of credit asset securitization; the second is to improve the stability of the liability side of the promote the development of interbank certificates of deposit, pioneering direct-to-business and personal certificates of deposit; the third is to break the rigid honor. Currently there is a strong rigid payment is expected on the financial market, and its yield is ten times or even several times the deposit rates, resulting in failure to deposit security feature to highlight.

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