Financial Focus | Perspective on New Economic Development Trends in the Half Year Reports of Listed Banks

With the release of the mid-term performance reports of listed banks in 2023, the changes in the flow of bank credit funds have attracted attention. The loan growth in the manufacturing industry, private enterprises, inclusive finance and other fields is relatively fast, and the investment in personal consumption loans is relatively strong... Against the background of supporting the recovery of the real economy, the total amount of credit investment by listed banks has increased and the structure has been optimized, which to some extent reflects the pulse of the economy.

Increase investment in manufacturing and optimize financing environment for private enterprises

From the semi annual report data, it can be seen that in the first half of this year, various banks continued to increase credit investment, focus on serving the real economy, and increase support for key areas and weak links of the national economy.

State owned large banks have effectively played the role of the main channel for macro policy transmission and the main force of financial services. In the first half of the year, the four major state-owned banks in industry, agriculture, China, and construction added a total of over 7.6 trillion yuan in new loans. Among them, both Industrial and Commercial Bank of China and Agricultural Bank of China have added loans exceeding 2 trillion yuan.

What are the main areas for new loans to be invested in? Reading the semi annual report, it can be seen that loans from various listed banks are mainly invested in areas such as inclusive small and micro enterprises, green development, manufacturing, and strategic emerging industries.

As of the end of June, Bank of China's strategic emerging industry loans, green loans, and inclusive small and micro enterprise loans increased by 45%, 32%, and 26% respectively compared to the end of the previous year. The balance of green finance loans at Everbright Bank increased by 31% compared to the beginning of the year, and the balance of loans for technology-based enterprises increased by 21.1% compared to the beginning of the year. The loan growth rate in areas such as green credit, strategic emerging industries, and inclusive finance of CITIC Bank has exceeded the overall loan growth rate.

Supporting the high-quality development of the manufacturing industry was a highlight of the performance of many banks in the first half of the year. At the end of June, the balance of loans from Industrial and Commercial Bank of China to the manufacturing industry reached 3.6 trillion yuan, the balance of medium and long-term manufacturing loans from Agricultural Bank of China increased by 45% compared to the end of the previous year, and the balance of loans from Construction Bank to the manufacturing industry in the first half of the year reached 2.73 trillion yuan

Increasing credit allocation to private enterprises was also a major trend in the first half of the year. According to the semi annual report, as of the end of June, the balance of private enterprise loans of ICBC and CCB both exceeded 5 trillion yuan, while the balance of private enterprise loans of Bank of China increased by 480.7 billion yuan compared to the end of the previous year, a significant increase year-on-year.

Wang Zhiheng, the President of Everbright Bank, introduced at the performance conference that the bank has studied and formulated a service plan to support the development of the private economy, launched 29 measures, and fully promoted the bank's efforts and acceleration in serving private enterprises.

Expanding domestic demand to promote consumption, maintaining rapid growth in personal consumption loans

Bank loans are not only the lifeblood of enterprise production and operation, but also a driving force for unleashing the consumption vitality of the people. Guided by a series of consumer promotion policies and measures, the banking industry has increased its investment in personal consumption loans to promote the development of the consumer market.

According to the semi annual report, in the first half of the year, ICBC's personal consumption loan investment exceeded 160 billion yuan, more than 40 billion yuan more than the same period last year. As of the end of June, the balance of personal consumer loans of China Construction Bank was 368.802 billion yuan, an increase of 24.83% compared to the end of the previous year. The balance of consumer loans from China Merchants Bank was 272.351 billion yuan, an increase of 34.68% compared to the end of the previous year.

As of the end of June, the credit card loan balance of China Construction Bank reached 939.596 billion yuan, and the credit card loan balance of China Merchants Bank reached 905.766 billion yuan. In the first half of this year, Agricultural Bank of China's credit card consumption exceeded 1 trillion yuan.

On August 25th, citizens and tourists queued up to buy snacks in the Xicheng · Yeweiyang block of Jianye District, Nanjing. Photo by Xinhua News Agency reporter Li Bo

"With the deepening implementation of various economic stability policies and the marginal recovery of residents' consumption tendencies, we are accelerating the transformation and upgrading of personal consumption loan products, continuously increasing support for key areas such as new citizens, new energy vehicles going to rural areas, and residential housing decoration in consumption credit, and fully helping to expand domestic demand and promote consumption," said Lin Li, Vice President of Agricultural Bank of China.

It is worth noting that in the first half of this year, against the backdrop of an increase in the amount of personal housing loans invested, the balance of personal housing loans from multiple banks showed varying degrees of decline. This is mainly due to the increase in early repayment of personal housing loans, offsetting the increase in investment volume. "In recent months, the demand for early repayment that has been newly accepted has generally stabilized, and has decreased significantly compared to the peak in April," said Li Yun, Vice President of China Construction Bank.

Recently, the financial regulatory authorities introduced policies to lower the interest rates on first-time housing loans. Experts believe that this will help reduce the phenomenon of early repayment of loans.

Continuous efforts in key areas to explore credit growth points

Currently, China is in a critical period of economic recovery and industrial upgrading, and credit funds provide more precise and effective support for economic development, which is of great significance.

At the mid-term performance press conference, multiple bank executives have issued signals to provide strong, stable, and sustainable financial support for the recovery and development of the real economy.

"We will combine the needs of the real economy, explore the growth points of credit, find the right direction for development, continue to expand the scale of new loans under controllable risks, improve the stability and sustainability of credit growth, and spare no effort to help the real economy recover and boost market confidence," said Zhang Xiaodong, Vice President of Bank of China.

From the areas of concern for various banks, key areas and weak links such as advanced manufacturing, inclusive finance, science and technology innovation finance, high-quality private enterprises, and agriculture, rural areas, and farmers will be the main directions for future credit investment.

The current real economy is facing the problem of insufficient demand for effective credit. Several bank executives believe that with the introduction of more stable growth policies, the domestic economy will accelerate its recovery, and effective credit demand will further recover and increase.

"Although the demand for real estate and related industries, as well as some export sectors, has been affected, the demand for county-level 'agriculture, rural areas, new energy, electric vehicles, science and technology innovation finance, and green and low-carbon sectors is relatively strong, and it is necessary to timely detect and ensure financial supply." Agricultural Bank of China President Fu Wanjun said that the amount of approved non lending reserve projects in the first half of the year was nearly 780 billion yuan more than the same period last year, and he is confident in achieving stable growth in credit investment in the second half of the year.

Several banks have stated that the next step will be to prioritize the restoration and expansion of consumer financial services, continue to reasonably increase consumer credit allocation, and promote consumption recovery. Agricultural Bank of China will continue to make efforts in key consumer areas such as home decoration, automobiles, electronic products, and cultural tourism, while CITIC Bank will focus on three major products: personal housing loans, personal business loans, and personal credit loans to help residents upgrade their consumption.