The General Administration of Financial Regulation and the Ministry of Housing and Urban-Rural Development jointly issued a notice in June, proposing a number of optimization measures to improve the efficiency and quality of "white list" project promotion, in order to further leverage the role of the urban financing coordination mechanism, meet the reasonable financing needs of real estate projects, and effectively support the work of ensuring housing delivery. "At present, commercial banks have approved 5,392 'white list' real estate projects, with approved financing amounts nearing 1.4 trillion yuan." On August 21, at the "Promoting High-Quality Development" series of thematic press conferences held by the State Council Information Office, Liao Yuanyuan, Director of the Statistics and Risk Monitoring Department of the General Administration of Financial Regulation (hereinafter referred to as "Financial Regulatory Authority"), mentioned the achievements made since the establishment of the real estate financing coordination mechanism. In January this year, the Ministry of Housing and Urban-Rural Development and the Financial Regulatory Authority jointly issued a document, guiding the establishment of urban real estate financing coordination mechanisms across the country. According to Liao Yuanyuan, to promote the implementation and effectiveness of the mechanism, the two ministries and commissions established a national task force in April this year for centralized office work and guided localities to establish local task forces to carry out work. In June, with the approval of the State Council, the Financial Regulatory Authority and the Ministry of Housing and Urban-Rural Development jointly issued a notice, proposing a number of optimization measures to improve the efficiency and quality of "white list" project promotion, to further leverage the role of the urban financing coordination mechanism, meet the reasonable financing needs of real estate projects, and effectively support the work of ensuring housing delivery. Under the promotion of the urban coordination mechanism, "white list" projects that meet the regulations have obtained financial support in a timely manner, playing a positive role in promoting the completion and delivery of projects, safeguarding the legitimate rights and interests of homebuyers, and stabilizing the real estate market. Liao Yuanyuan stated.
At the press conference, the Financial Regulatory Authority also responded to hot topics such as the slowdown in the net profit growth rate of commercial banks, the reform and risk resolution of small and medium-sized financial institutions, and financial support for scientific and technological innovation. In the first seven months of this year, commercial banks issued 3.1 trillion yuan in personal housing loans.
While meeting the reasonable financing needs of real estate projects, how is the "housing delivery" work progressing? Liao Yuanyuan introduced that currently, in order to do a good job in ensuring housing delivery, the urban coordination mechanisms are comprehensively understanding the information of real estate projects under construction that have been sold but not yet delivered in their respective locations. For projects that need to obtain financing support through the "white list" but have not yet met the "white list" conditions and standards, the urban coordination mechanism urges banks to propose targeted opinions and suggestions, real estate companies to take measures to repair problematic projects as soon as possible, and city governments to strengthen coordination to promote the inclusion of projects that meet the "white list" conditions and standards. In addition, Liao Yuanyuan revealed that since the beginning of this year, the Financial Regulatory Authority has continued to guide financial institutions to provide real estate financing services through multiple channels, fully utilizing various policy measures including the urban coordination mechanism, and the financing of the real estate industry by banking institutions has maintained a stable and increasing trend. As of now, the balance of real estate development loans has increased by more than 400 billion yuan compared to the beginning of the year, the balance of operational property loans has grown by 19% year-on-year, and the balance of merger and acquisition loans has increased by 21% year-on-year. From January to July this year, commercial banks issued 3.1 trillion yuan in new personal housing loans, effectively supporting the housing needs of residents for rigid and improved housing.
The increase in the intensity of loan loss provisions has led to a decline in the net profits of some private banks.
In recent years, the growth rate of net profits of Chinese commercial banks has continued to slow down, and the current operating conditions of the banking industry have attracted market attention. In response, Liao Yuanyuan pointed out that this is mainly due to the continuous decline in loan interest rates and the narrowing of net interest margins. "From January to July this year, the average interest rate of new corporate loans issued by banks decreased by 39 basis points compared to the same period last year, and decreased by more than 100 basis points compared to the previous high point in 2021. In the first half of the year, the net interest margin of commercial banks was 1.54%, a year-on-year decrease of 19 basis points, and a decrease of more than 50 basis points from the previous high point. The narrowing of the net interest margin has led to a significant slowdown in the growth rate of banks' net interest income." Liao Yuanyuan explained. Liao Yuanyuan further pointed out that since the net interest income of Chinese commercial banks accounts for about 80% of operating income, the slowdown in the growth rate of net interest income has a very significant impact on profits. Another factor affecting net profits is that in recent years, commercial banks have continuously reduced service charges, among which income from fees and commissions has decreased year-on-year for five consecutive years. In Liao Yuanyuan's view, in the face of the pressure of slowing profit growth, commercial banks have been exploring internal potential and reducing costs and increasing efficiency through various means in recent years, and the profitability level of Chinese commercial banks is still within a reasonable range. In the first half of this year, the net profit of commercial banks increased by 0.4% year-on-year, still achieving positive growth in net profits. The return on assets and return on capital of banks during the same period also remained basically stable. "Next, the Financial Regulatory Authority will guide banking institutions to continue to strengthen refined management, optimize asset-liability structure, cultivate new profit growth points, and continuously improve profitability." Liao Yuanyuan mentioned. It is worth mentioning that some market participants are concerned about the negative growth rate of net profits of private banks. In response, Liao Yuanyuan said that in the first half of this year, private banks were generally profitable, but the net profits of some private banks decreased year-on-year, mainly because these banks significantly increased the intensity of loan loss provisions compared to the same period last year, which directly affected the current profits and led to a phased decline in the net profits of private banks.Guard against the manipulation and dominance of large shareholders over small and medium financial institutions
Beyond operational efficiency, the reform and risk management of small and medium financial institutions are also a focus of market attention. According to Xiao Yuanqi, Deputy Director of the Financial Regulatory Administration, small and medium banks and insurance institutions are an important part of China's financial system. As of the end of June, there are 3,830 small and medium banks (including city commercial banks, rural commercial banks, rural credit cooperatives, and rural banks) nationwide, with assets of 115 trillion yuan, accounting for 28% of the total assets of the entire banking industry; the loan balance is 62 trillion yuan, with nearly 80% invested in small and micro enterprises and the "three rural" (agriculture, rural areas, and farmers) sector. There are 163 small and medium insurance companies with total assets of 9.7 trillion yuan, accounting for 30% of the total assets of the insurance industry. In response to the reform and risk management of small and medium financial institutions, Xiao Yuanqi emphasized that in terms of reform, a principle of seeking truth from facts and steady progress should be adopted, without a "one-size-fits-all" approach. The principle of one province, one policy, one bank, one policy, and one company, one policy should be adhered to. In terms of regulation, it is necessary to focus on the construction of corporate governance and strengthen information disclosure to leverage market constraints and external supervision. Secondly, it is essential to strengthen behavioral regulation. The behavior of major shareholders should be closely monitored to prevent large shareholders from manipulating and dominating small and medium financial institutions. At the same time, small and medium financial institutions should find their own market positioning, with the general principle being to follow a path of differentiated and specialized development. In addition, they should focus on their main responsibilities and not blindly seek to be large and comprehensive. "Small and medium financial institutions should be down-to-earth, seek progress in stability, and not blindly pursue excessive speed, scale, or overly complex business beyond their capabilities and resource endowments. They should focus on serving small and micro enterprises, the 'three rural' sector, rural revitalization, communities, and local areas. If they can truly leverage these advantages, the development prospects for small and medium financial institutions are very broad," said Xiao Yuanqi. Xiao Yuanqi also pointed out the need to optimize the regional financial layout. "The main focus should be on optimizing the regional financial layout based on factors such as the scale of regional economic development, the total amount of finance, development trends, and changes in financial demand."
Study on increasing the proportion of insurance funds invested in venture capital funds
As the first of the "five major articles," technology finance has endowed financial services with a new historical mission to serve technology. At the press conference, Wang Shengbang, Director of the Legal Department of the Financial Regulatory Administration, also responded to financial support for technological innovation. Wang Shengbang pointed out that technology companies have distinct characteristics compared to other industries, such as innovation-driven, technology-intensive, high growth, long R&D cycles, and high uncertainty, so traditional financing models cannot fully adapt to them. Therefore, the Financial Regulatory Administration has done some work. First, it has improved the policy framework for technology finance. The Financial Regulatory Administration has issued guidelines for the banking and insurance industries to do well in the "five major articles," and has also issued a notice on strengthening the full life cycle financial services for technology companies, further optimizing the technology credit service mechanism, and guiding banks and insurance institutions to provide differentiated and targeted financial services for technology companies in different industries and growth stages, continuously improving service efficiency to meet the financial needs of different companies. Second, it has actively innovated financial products, regulating the development of exclusive financial services such as "loan + external direct investment," technology insurance, and supply chain finance for technology leader companies. The Financial Regulatory Administration, in conjunction with the National Intellectual Property Administration, has implemented paperless online registration for intellectual property pledge financing nationwide, increasing the financing convenience for technology companies. At the end of June, the loan balance of China's high-tech enterprises increased by 20% year-on-year, and the balance of intellectual property pledge loans was 234 billion yuan, a 38% increase year-on-year. Third, it has further leveraged the risk protection and long-term capital advantages of insurance funds. At the end of June, insurance companies provided 6 trillion yuan in insurance protection for risks in the process of scientific research, achievement transformation, and promotion application of technology activities. It has supported the removal of some policy barriers for insurance funds to carry out equity and venture capital investments, with some large insurance companies actively participating in various funds and equity investments. At the end of July, the long-term equity investment of insurance funds was 2.7 trillion yuan. Fourth, it has improved the regulatory incentives for technology finance and enhanced the professional service capabilities of technology finance. It encourages banks to carry out differentiated credit evaluation systems that are more in line with the operational characteristics of technology innovation companies. It encourages banks to explore longer-term performance assessment plans, appropriately increase the tolerance for non-performing loans, and establish a due diligence exemption mechanism. For the next steps, Wang Shengbang mentioned that intellectual property finance ecological comprehensive pilot zones will be established in areas with active technological innovation to provide enterprises with diversified financial support. It will study expanding the scope of equity investment pilot projects through financial asset investment companies. It will study increasing the proportion of insurance funds invested in venture capital funds. It supports insurance companies' investments and encourages more insurance funds to be long-term and patient capital, invested in the technology sector, and also supports financial institutions such as wealth management companies to participate in technology financial services in accordance with laws and regulations.Please provide the text you would like me to translate into English.
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