When someone shares with you something of value, you have an obligation to share it with others.
Friday, 12 December 2008
ICBC to increase lending to smaller firms by 15pc
The Industrial and Commercial Bank of China, the mainland’s largest lender, said yesterday it would increase lending to small and medium-sized enterprises by at least 15 per cent in each of the next three years.
The Industrial and Commercial Bank of China, the mainland’s largest lender, said yesterday it would increase lending to small and medium-sized enterprises by at least 15 per cent in each of the next three years.
The bank is among the first to pledge more support to the beleaguered 42 million SMEs across the nation in response to Beijing’s calls. “We put a great emphasis on the SME financing business in our development strategy,” ICBC said.
The lender made 282 billion yuan (HK$318.97 billion) in loans to SMEs in the first 10 months of the year, up 9.8 per cent from a year earlier. At the end of October, its outstanding loans to SMEs stood at 1.448 trillion yuan, accounting for 44 per cent of its total outstanding lending, it said.
Guo Tianyong, a professor at the Central University of Finance and Economics in Beijing, was unimpressed by the 15 per cent increase.
“Obviously, the move is to address the political needs of the Chinese government. SME loans are traditionally and universally not favoured by risk-averse banks because of the companies’ low survival rates.”
The country’s political leaders are concerned that a collapse of SMEs would lead to social unrest.
SMEs account for 60 per cent of the economy and 70 per cent of jobs in urban areas.
Unable to get credit amid the global financial turmoil, tens of thousands of SMEs nationwide have folded or halted operation.
Since the middle of the year, the banking regulator has repeatedly called on banks to expand lending to SMEs. In August, it urged that credit to them should rise at a rate no slower than the banks’ overall loan growth.
The Chinese Academy of Social Sciences forecast loans at mainland banks to expand at 16 per cent next year.
“The mild SME loan growth announced by ICBC suggests the bank’s business risk will not increase sharply. I expect the finance ministry will pick up part of bad SME loans from banks’ balance sheets,” Mr. Guo said.
ICBC said the loan quality to small firms had been sound. At the end of September, the non-performing loan ratio in that segment was 1.28 per cent, lower than for overall corporate loans. About 84 per cent of the SME loans were backed by collateral and 90 per cent had a repayment period of less than a year.
1 comment:
ICBC to increase lending to smaller firms by 15pc
Jane Cai
12 December 2008
The Industrial and Commercial Bank of China, the mainland’s largest lender, said yesterday it would increase lending to small and medium-sized enterprises by at least 15 per cent in each of the next three years.
The bank is among the first to pledge more support to the beleaguered 42 million SMEs across the nation in response to Beijing’s calls. “We put a great emphasis on the SME financing business in our development strategy,” ICBC said.
The lender made 282 billion yuan (HK$318.97 billion) in loans to SMEs in the first 10 months of the year, up 9.8 per cent from a year earlier. At the end of October, its outstanding loans to SMEs stood at 1.448 trillion yuan, accounting for 44 per cent of its total outstanding lending, it said.
Guo Tianyong, a professor at the Central University of Finance and Economics in Beijing, was unimpressed by the 15 per cent increase.
“Obviously, the move is to address the political needs of the Chinese government. SME loans are traditionally and universally not favoured by risk-averse banks because of the companies’ low survival rates.”
The country’s political leaders are concerned that a collapse of SMEs would lead to social unrest.
SMEs account for 60 per cent of the economy and 70 per cent of jobs in urban areas.
Unable to get credit amid the global financial turmoil, tens of thousands of SMEs nationwide have folded or halted operation.
Since the middle of the year, the banking regulator has repeatedly called on banks to expand lending to SMEs. In August, it urged that credit to them should rise at a rate no slower than the banks’ overall loan growth.
The Chinese Academy of Social Sciences forecast loans at mainland banks to expand at 16 per cent next year.
“The mild SME loan growth announced by ICBC suggests the bank’s business risk will not increase sharply. I expect the finance ministry will pick up part of bad SME loans from banks’ balance sheets,” Mr. Guo said.
ICBC said the loan quality to small firms had been sound. At the end of September, the non-performing loan ratio in that segment was 1.28 per cent, lower than for overall corporate loans. About 84 per cent of the SME loans were backed by collateral and 90 per cent had a repayment period of less than a year.
Post a Comment