On September 24, 2024, Li Yunze, the director of the State Administration of Financial Regulatory (hereinafter referred to as "Financial Regulatory Administration"), stated at a press conference held by the State Council Information Office that this year, the Financial Regulatory Administration has taken solid steps in three major tasks: risk prevention, enhanced supervision, and promoting development.
In terms of risk prevention, China's financial risks are steadily converging, the financial industry is operating steadily, and risks are controllable.
With the gradual resolution and mitigation of the three major risks of real estate, local debt, and small and medium-sized financial institutions, the Financial Regulatory Administration is firmly guarding the bottom line of not occurring systemic financial risks.
In terms of enhanced supervision, the Financial Regulatory Administration has guided the banking and insurance industries to return to their origins and focus on their main businesses; promoted the introduction of new "National Ten Articles" for the insurance industry, timely improved asset management regulations, continuously strengthened the governance of non-bank institutions, optimized and consolidated the management of credit foundations; guided financial institutions to actively respond to the narrowing of net interest margins and interest rate risk; focused on preventing and controlling substantial risks, effectively implemented the due diligence exemption system, and at the same time seriously investigated major illegal and irregular behaviors, creating a fair and just market order.
In terms of promoting development, the Financial Regulatory Administration has made efforts to unblock the financing bottlenecks and blockages of small and medium-sized enterprises, improve the adaptability of the economy and finance, and increase the financial service strength for key areas and weak links.
Guide insurance institutions to fully provide compensation services for major accidents and natural disasters such as rainstorms and typhoons, helping the affected people and business entities to get through difficulties.
The Economic Observer Network has sorted out the key words of Li Yunze's speech, and from these key words, one can get a glimpse of the direction of the next financial policy.
Key word one: Large banks plan to increase capital.
Original text: In order to consolidate and improve the ability of large commercial banks to operate steadily and develop, and to better play the main force role in serving the real economy, after research, the country plans to increase the core tier-one capital of six large commercial banks, and will implement it in an orderly manner according to the idea of "overall promotion, phased and batch, one bank one policy".
Interpretation: Large commercial banks are the main force in serving the real economy in China's financial system, and they are also the ballast stone for maintaining financial stability.
The overall net interest margin of large commercial banks has further narrowed, which continues to constrain the bank's profitability, so the way to increase capital by retaining profits is constrained.
Data from the Financial Regulatory Administration shows that as of the end of the first half of the year, the net interest margin of large commercial banks was 1.46%, the same as that of foreign banks (1.46%), lower than joint-stock commercial banks (1.63%), private banks (4.21%), and rural commercial banks (1.72%), slightly higher than urban commercial banks (1.45%).
At the same time, in terms of net profit, the semi-annual report data of listed banks shows that the net profit attributable to the parent company of large commercial banks decreased by 0.96% in the first half of the year, while the net profit attributable to the parent company of joint-stock commercial banks, urban commercial banks, and rural commercial banks increased by 1.05%, 6.17%, and 6.16% respectively.
In terms of core tier-one capital, as of the end of the second quarter of 2024, the core tier-one capital adequacy ratio of large commercial banks slightly decreased by 9 basis points (1 basis point is 0.01%) to 12.31%, still maintaining a relatively high level.
Among them, the Construction Bank is 14.01%, up 86 basis points from the beginning of the year; ICBC is 13.84%, up 12 basis points from the beginning of the year; Agricultural Bank is 11.13%, up 41 basis points from the beginning of the year; Bank of China is 12.03%, up 40 basis points from the beginning of the year; Bank of Communications is 10.30%, up 7 basis points from the beginning of the year; Postal Savings Bank is 9.28%, down 25 basis points from the beginning of the year.
Supplementing the capital of large commercial banks will further enhance their ability to serve the real economy.
Key word two: Bank equity investment pilot.
Original text: Previously, the financial asset investment companies under large commercial banks have carried out equity investment pilots in Shanghai.
The Financial Regulatory Administration will work with relevant departments to study and expand the pilot scope from the original Shanghai to Beijing and other 18 large and medium-sized cities with active technological innovation.
Interpretation: Li Keying, a researcher in the financial business department of Dongfang Jincheng, believes that with the expansion of the pilot scope, the participation of financial asset investment companies under large commercial banks in the field of equity investment will be further improved, injecting new vitality into the market, which is beneficial for increasing the capital supply of the capital market, promoting the activity of market transactions, and attracting more funds to flow in, and enhancing market confidence.
Financial asset investment companies can more effectively guide funds to enterprises with growth potential and innovation capabilities through equity investment methods, especially high-tech enterprises in the initial or growth stages.
This will further enhance the ability of financial services to serve the real economy, help promote industrial upgrading and economic structural adjustment, and promote high-quality economic development.
Key word three: Micro and small enterprise financing coordination mechanism.
Original text: The Financial Regulatory Administration has established a coordination mechanism for supporting micro and small enterprise financing in conjunction with the National Development and Reform Commission.
Interpretation: China has more than 53 million small and micro enterprises, which is one of the countries with the most small and micro enterprises in the world.
Over the past decade, with the continuous development of inclusive finance, the coverage, accessibility, and satisfaction of small and micro enterprises in financial services have been significantly improved.
According to data released by the Financial Regulatory Administration, as of the end of the second quarter of this year, the total amount of inclusive small and micro enterprise loans from banking financial institutions was 32.04 trillion yuan.
Nevertheless, the field of inclusive finance still faces some challenges.
For example, how to further expand the coverage of financial services and improve its efficiency, and how to effectively manage the loan risks of small and micro enterprises and other issues.
Especially in recent years, affected by the macro environment, consumption is relatively weak, and the non-performing risk of the small and micro credit industry has increased.
In order to further promote the development of inclusive finance, the banking industry needs to adhere to the basic principles of commercial sustainability, while actively adopting the latest achievements in the field of financial technology to innovate service models and improve service quality.
This also requires regulatory authorities to increase a series of policy support.
Key word four: Urban real estate financing coordination mechanism.
Original text: In recent years, China's real estate market supply and demand relationship has undergone significant changes, and the continuous slowdown in sales has led to tight liquidity of real estate companies, and some sold and under-construction projects are difficult to be delivered on time.
To solve this problem, the Financial Regulatory Administration has established an urban real estate financing coordination mechanism in conjunction with the Ministry of Housing and Urban-Rural Development.
The biggest feature of this mechanism is "city-based, project-centered", which distinguishes the risks of real estate company groups from the construction of real estate projects, gives full play to the overall coordination role of local governments, includes compliant under-construction and sold projects in the "white list" of projects, guides financial institutions to meet the reasonable financing needs of real estate projects, promotes the completion and delivery of projects, and effectively protects the legitimate rights and interests of the vast number of homebuyers.
Interpretation: At the beginning of this year, the Financial Regulatory Administration deployed to promote the implementation of the urban real estate financing coordination mechanism, requiring precise support for the reasonable financing needs of real estate projects, and promoting the stable and healthy development of the real estate market.
Yin Jianfeng, the chief economist of Zheshang Bank, said that the real estate industry has a wide-ranging pull and drive effect on the upstream, midstream, and downstream industries, and is the central link for stabilizing the industrial chain.
Stabilizing real estate is the cornerstone of stabilizing China's financial system.
Stabilizing real estate is the key to stabilizing investment demand.
From the economic demand side, on the one hand, real estate investment accounts for nearly 20% of all fixed asset investments, and it is also a key variable that determines other investment demands; on the other hand, real estate is the most important asset of Chinese households, and only by stabilizing real estate can the wealth of households be stabilized, which will produce a positive wealth effect and stimulate consumption demand.
In addition, Yin Jianfeng also said that the stability of real estate is also the key to ensuring the stability of the financial system.
For example, more than half of the more than 30 trillion yuan of inclusive small and micro loans nationwide are mortgaged by real estate.
Therefore, the introduction of various real estate support policies such as the urban real estate financing coordination mechanism is an important measure to resolve risks and promote the transformation of the real estate development model.
With the steady progress of the coordination mechanism, the supply side of the real estate industry has basically stabilized, and the rapid decline of housing prices in some cities has been curbed.
In the future, with the active fiscal and monetary policies exerting force from the demand side, China's real estate industry and even the Chinese economy will definitely be able to enter a virtuous track of stable development.
Key word five: Private securities investment fund.
Original text: The capital market undoubtedly has an important role in financial stability and economic development.
The Financial Regulatory Administration has always attached great importance to the capital market and actively guided banks, insurance companies, and asset management institutions to maintain the stability of the capital market.
Previously, with the approval of the State Council, the Financial Regulatory Administration promoted China Life and New China Life to carry out pilot projects, jointly initiated the establishment of private securities investment funds, and raised insurance funds to invest in the capital market.
The fund has a registered capital of 50 billion yuan and has officially started investment operations, and the progress is currently smooth.
Interpretation: Encouraging insurance funds to be long-term investors has been a hot topic in the past two years.
Li Keying, a researcher in the financial business department of Dongfang Jincheng, believes that insurance funds have the characteristic of long-term liabilities, which are equipped with a long-term investment concept.
When insurance funds become long-term investors in the market, they are more likely to adopt a value investment concept and will not frequently buy and sell due to short-term fluctuations, thereby helping to stabilize market fluctuations and enhance the resilience of the market.
The entry of insurance funds into the market will directly increase the capital supply of the market and provide more liquidity support for the market.
This helps to enhance the trading activity of the market and promote the healthy development of the capital market.
In addition, Li Keying said that the participation of insurance funds will optimize the investor structure of the market, making market investors more diversified and professional.
This helps to improve the overall investment level of the market and promote the capital market to move towards high-quality development.
More importantly, as long-term funds "living water", insurance funds can flow more into the real economy, supporting the development of key national strategic projects, emerging industries, and small and medium-sized enterprises.
This will help promote industrial upgrading and economic structural adjustment, and promote high-quality economic development.The person in charge of PICC Asset Management stated that the company will actively fulfill its responsibilities as a central financial enterprise, closely align with the direction encouraged by national policies, and further support the stable growth of the economy through project investments in infrastructure construction and revitalizing existing assets.
The company is committed to a high-quality development transformation and innovative development of asset-backed securities (ABS) business.
It will make good use of policy tools and appropriately increase the overall scale of stock allocation.
It will actively implement long-term assessment orientations, reflecting the patient capital positioning of insurance funds.
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