Banking regulators welcome lower real estate lending ratios, highlighting rising small lenders competing for market share

Although the share of real estate lending in the total credit provided by Chinese banks has declined since the launch of a new system to limit levels at the end of last year, the intention is to spur real estate lending by small regional banks. There was also an effect that it did not. Bank.

Liu Zhongrui, Vice Chairman of the Bank of China Insurance Supervisory Board (CBIRC), said the Bank of China’s “Real Estate Loan Concentration” – defines real estate loan balances and personal mortgage balances as a share of all RMB. Loans from certain banks have declined significantly since the beginning of 2021.

“As of the end of April, the banking sector’s concentration on real estate lending was down 0.5 points from the same period last year,” Liu told state media.

“All six major state banks have achieved a reduction in concentration on real estate lending, and concentration on other types of banks is on an overall declining trend.”

CBIRC data further show that banking real estate loans increased 10.5% year-on-year at the end of April, the lowest growth in eight years.

Nonetheless, Lee emphasized the problems that arose during the implementation of the new policy, including competition between small and medium-sized regional banks over increasing market share in the local real estate loan market after the withdrawal of large banks.

This led to a faster increase in their mortgages and a greater concentration of real estate loans.

“CBIRC is focusing on this issue, implementing a namelist system for managing banks with a relatively high proportion of new mortgages, these banks implementing real estate financial regulatory requirements and rationalizing the pace of growth. With a real estate loan, “Lu said. “If you do not correct within the set deadline, stricter regulatory measures will be taken.”

At the end of 2020, China’s central bank and CBIRC launched a new system for managing the proportion of real estate loans by commercial banks.

Under this system, Chinese banks’ “real estate loan concentration” (defined as real estate loan balances and personal mortgage balances in all RMB loans by banks) meet the requirements set by PBOC and CBIRC. Must be met.

For major Chinese banks, the real estate lending ratio is capped at 40% and the personal mortgage ratio is capped at 32.5%. The proportions of medium-sized banks are 27.5% and 20%, respectively, and those of small banks are 22.5% and 17.5%, respectively.

Liu Zhongrui said the focus of the management system is to increase the resilience and stability of banks, prevent systemic risk resulting from over-concentration of real estate lending, provide banks with better service to the real economy and provide financial supply. He said it was to encourage them to promote. -Side structural reform.

Liu also said that CBIRC’s local agency conducted on-site and off-site surveys of lenders in urban areas where there were signs of a fraudulent influx of business loans into the real estate market, with certain companies and individuals. Said he discovered that he was using multiple means. “Dodge regulatory requirements and apply for a business loan to pay for a home purchase”

“Some borrowers circulate, trade, or forge the purpose of a loan from multiple bank accounts to hide the ultimate goal of buying a home. doing”

Liu said the CBIRC will continue to work with local housing regulators and the central bank of China to scrutinize the outcome of policy implementation.

“Banks and intermediaries who deliberately hide problems or do not take immediate accountability for problems that have become apparent will be subject to strict regulatory measures,” Liu said.

“Individuals who abuse business loans are reported to the credit rating system not only to reduce credit quotas, but also to increase the cost of abusing loans in violation of regulations.”

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https://www.chinabankingnews.com/2021/06/03/chinas-banking-regulator-hails-reduction-in-real-estate-lending-ratios-highlights-rise-amongst-smaller-lenders-vying-for-market-share/ Banking regulators welcome lower real estate lending ratios, highlighting rising small lenders competing for market share

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