中欧国际商学院(精品)-中国金融发展、改革及挑战China’s Financial Development, Reforms and Challeng

China’s Financial System
• Progress in Banking Reform (2)
– Brought in foreign strategic investors before IPO – Foreign strategic investors introduced
• CCB: Bank of America, Asian Financial Holdings (AFH), holding 14.4% • BOC: Royal Bank of Scotland, AFH, UBS, Asian Development Bank, holding 16% • ICBC: Goldman Sachs, Allianz et. al. 17%
– CCB listed in Hong Kong in 2005, BOC and ICBC in 2006 – Reorganization and recapitalization of China Agricultural Bank and Postal Savings Bank for listing
Year 2006 12549.2 7.09
Year 2007 1st Qtr 12455.7 6.63
Balance (hundred million) Percentage(%)
Percentage(%)
China’s Financial System
• Chinese Capital Marment in banks raised to 25% – Invited private entrepreneurs to take minority stake
China’s Financial System Comparison of Chinese and Foreign Banks 2002
Source: Banks’ Annual Reports, CICC Research
China’s Financial System Comparison of Chinese and Foreign Banks 2005
(US$ mn, 2005) BNP Paribas Citigroup Bank of America HSBC Holdings Bank of Tokyo-Mitsubishi ICBC BOC CCB Total Assets 1,560,018 1,494,037 1,269,892 1,501,970 863,021 788,047 481,568 559,920 Net Profit Profit per Staff 66,096 7,256 24,589 82,237 na 16,465 15,873 55,891 na 2,676 4,115 10,829 3,357 16,014 4,792 15,958 ROA 0.67 1.66 1.30 1.06 0.30 0.59 0.67 0.92 ROE Fee Income NPL Ratio 20.20 20.81 3.47 22.30 36.82 2.01 16.51 36.13 0.85 16.80 32.24 2.37 na 10.13 40.15 13.30 6.41 4.69 11.45 7.97 4.90 17.99 6.57 3.84
– 1540 publicly listed companies on domestic exchanges, 143 on overseas (Feb 2007) – Equity market capitalization of around US$3 trillion (2007)
• State Shares 33.1%, (non-tradable until 2005) • Legal person shares 16.7% (non-tradable until 2005) • Tradable individual shares 50.2%
(US$ mn, 2002) BNP Paribas Citigroup Bank of America HSBC Holdings Bank of Tokyo-Mitsubishi ICBC BOC CCB Total Assets 710,319 1,097,190 660,458 795,246 807,111 571,768 350,931 372,367 Net Profit Profit per Staff 37,571 3,295 15,276 61,104 na 9,249 6,239 33,833 na 42 746 1,841 1,141 5,927 520 1,694 ROA 0.52 1.48 1.23 0.90 0.01 0.14 0.34 0.15 ROE Fee Income NPL Ratio 16.74 35.50 6.45 20.01 49.00 2.34 16.40 35.00 1.47 13.69 29.40 2.90 0.22 32.90 na 3.35 5.71 25.69 4.31 33.99 22.50 4.01 4.93 15.17
Source: Banks’ Annual Reports, CICC Research
ROA & ROE of Listed Chinese Banks 2006, 2007
ROA Year 2006 China Merchants Bank Bank of China ICBC Industrial Bank Bank of Communications China CITIC Bank Shenzhen Development Bank China MinSheng Bank Shanghai Pudong Development Bank HuaXia Bank 0.81% 0.85% 0.71% 0.70% 0.78% 0.60% 0.54% 0.61% 0.53% 0.36% First half year of 2007 1.20% 1.06% 1.05% 1.02% 0.93% 0.82% 0.78% 0.73% 0.70% 0.44% Year 2006 16.70% 12.81% 13.60% 26.20% 14.10% 14.10% 22.40% 22.10% 16.50% 13.10% ROE First half year of 2007 21.40% 14.09% 19.90% 29.90% 17.47% 11.70% 31.50% 19.00% 23.70% 17.80%
China’s Financial System The State’s Dominance of the Banking Industry (Assets, 2006)
Urban Credit Union 0.5% City Com m ercial Banks 6.9% Joint Stock Banks 18.8% Rural Credit Union 9.5% Foreign Banks 2.1%
China’s Financial System Financial Regulatory Structure
The State Council
CBRC
Commercial Banks Credit Cooperatives Trust & Investment
Source: CICC Research
– Government bond market cap US$ 364 billion – Corporate bond market cap US$35 billion
Progress of Chinese Stock Market Reform
• Before 2005, state-owned and legal person-owned shares could not be traded on stock exchanges. Large shareholders paid little attention to the prices of tradable shares held by the public. • In 2005, the government initiated reforms that made non-tradable shares tradable. • This aligned the interests of large shareholders with that of outside shareholders
CSRC
Securities Firms Exchanges Fund Management
CIRC
Insurance Companies
China’s Financial System Heavy Reliance on Bank Financing (2006)
Source: CEIC; CICC Research
China’s Financial System
• Progress in Banking Reform
– Recapitalization of state banks
• 4 asset management companies set up in year 2000 to take over US$1,600 billion of non-performing loans • US$1108 billion NPLs disposed up to March 2006, cash recovery rate 20.8% • US$45 billion capital injection in 2004 for BOC and CCB • US$15 billion capital injection in 2005 for ICBC
State-owned Banks 62.2%
Source: The Statistics Quarterly PBOC
Banks in China
• State-owned banks: ICBC, CCB, BOC, CAB • Joint stock banks: Bank of Communication, China Merchants Bank, Guangdong Development Bank, Minsheng Bank • City banks and credit unions: Bank of Shanghai, Bank of Nanjing, Ningbo Commercial Bank • Foreign banks: HSBC, Citibank, Standard Chartered,
Nonperforming Loans of Chinese Banks
21000 18000 15000 12000 9000 6000 3000 0 3 0 9 6 15 12
Year 2004 17176 13.21
Year 2005 13114 8.61
Balance (hundred million)
China’s Financial Development, Reforms and Challenges
Chun Chang Professor of Finance China Europe International Business School
China’s Latest Financial Reforms and Development
China’s Financial System
• Japan-Germany-like Financial Structure
– Financial assets concentrated in the banking system – No stock markets before 1991 – In 2006, more than 80% of financing is still through banks – insurance industry is growing fast but still underdeveloped – legal framework for private equity financing is just starting