What is the current state of China's banking industry

By organizing the annual reports of the six major joint-stock banks of China Merchants, Industrial, Pudong, Everbright, Minsheng and Ping An, it can be found that in 2020, in addition to Minsheng Bank, the remaining five banks' non-performing rate generally fell, the provision rate generally rose, and the industry's asset quality continues to be good overall. However, Minsheng Bank's provision coverage rate slipped by 16.12 percentage points compared to 2019, only by adjusting this indicator, or can release profits of more than 10 billion yuan.

Higher industry concentration

In 2020, the total assets of China's joint-stock commercial banks in the total assets of the main six joint-stock banks accounted for nearly 90% of the total assets of the market concentration is higher, which six joint-stock banks are China Merchants, Industrial, Pudong Development, Everbright, Minsheng, and Ping An Bank.

Industry total assets overall up

From the trend of asset changes, since 2017, China's major major joint-stock commercial banks asset size overall to maintain a rising trend. Among them, China Merchants Bank has a higher asset scale, reaching 8.36 trillion yuan in 2020. In addition, Pudong Development Bank, Industrial Bank, CITIC Bank, Minsheng Bank asset size is also relatively high.

Industry asset quality continues to be good overall, Minsheng Bank has the highest non-performing rate

By organizing the annual reports of China Merchants, Industrial Bank, Pudong Development Bank, Everbright, Minsheng and Ping An 6 major joint-stock banks, it can be found that in 2020, in addition to the Minsheng Bank, the remaining 5 banks non-performing rate generally decreased, the provision rate generally increased, industry asset quality continues to be good overall. The

Non-performing loan rate, China Merchants Bank has the lowest non-performing rate, only 1.07%, a decline of 0.09 percentage points over the same period in 2019; Ping An Bank ranked second at 1.18%, the largest decline in the six banks, down 0.47 percentage points year-on-year.

And Minsheng Bank had the highest non-performing rate of 1.82 percent, and was the only one of the six banks whose non-performing increased, up 0.26 percentage points from the same period in 2019. However, despite the decrease, Minsheng Bank's non-performing rate still meets regulatory requirements.

Borrowing provisions Minsheng Bank released profits of more than 10 billion yuan

Provision coverage ratio, 6 shares by provision coverage ratio year-on-year incremental in descending order, respectively, for Industrial Bank (+19.7 percentage points), Ping An Bank (+18.28 percentage points), Pudong Development Bank (+17.83 percentage points), China Merchants Bank (+10.9pc), Everbright Bank (1.09pc) and Minsheng Bank (-16.12pc). Minsheng Bank was also the only bank to see a drop in its provisioning ratio.

From the perspective of net profit, since 2017, China's major joint-stock commercial banks have shown an overall trend of growth in net profit.2020, in addition to Pudong Development Bank's year-on-year decline of 0.99% in net attributable profit, Minsheng Bank is the six joint-stock banks with the largest decline in net attributable profit in 2020, down 36.25% year-on-year to 34.309 billion yuan, while the remaining four have maintained a small positive growth. China Merchants Bank has a more pronounced operational advantage, with net profit much higher than other similar banks. in 2020, China Merchants Bank's net profit amounted to 97.3 billion yuan.

As of the end of 2020, Minsheng Bank's provision coverage ratio was 139.38%, down 16.12 percentage points from 155.50% in the same period of 2019. Combined with the 70.049 billion yuan of non-performing loan balances backward, if the provision coverage ratio is kept unchanged, Minsheng Bank's profit for the year will be reduced by 11.292 billion yuan.

The annual report shows that in 2020, Minsheng Bank's net attributable profit was 34.309 billion yuan. And in 2019, Minsheng Bank's provisioning ratio increased by 21.45 percentage points from 2018. Only by adjusting this indicator, or release profits of 11.292 billion yuan.

The above content refers to the China Small and Medium-sized Bank Industry Market Outlook and Investment Planning Analysis Report by the Prospective Industry Research Institute.