2024年中国不良贷款市场报告.pdf

2023 China NPL Market Report Contents 2023 China NPL Market Report A publication from:1 Notice to Readers 2 Chapter 1:Market Update 4 NPL Balance in China Commercial Banks 5 Provincial NPL Balance 6 Chapter 2:Overview of Recent NPL Transactions 6 NPL Bid&Transaction Trend 6 Breakdown of NPL Transaction Volume by Market 9 Distribution of NPL Bid&Transaction Volume 10 Personal NPL Market 12 Chapter 3:Overview of Online NPL Auctions 13 Chapter 4:Overview of Online Collateral Judicial Auctions 13 Overall Auction Summary 15 Auctions by Asset Type 17 Judicial Auction Overview in Zhejiang&Guangdong Province 19 Sponsoring Organisations CHINA NPL MARKET REPORT Notice to Readers.This Report,undertaken jointly by Zheshang Asset Research Institute and Pepper Group(China)provides readers with a better scope to understand the dynamics and recent activities within Chinas NPL market.The first edition was released in August 2020 and will be published on a semi-annual basis to focus on current government regulations and policies,recent industry activities,insights into the primary and secondary NPL markets and the online judicial auction market.Li Chuanquan Deputy Chairman of Zheshang AMC CSO of Zheshang AMC Dean of Zheshang Asset Research Institute Karen Chen CEO of Pepper China Co-Head Principal Investments Asia Pepper GroupPage|1 报告免费分享+V：R t h e 4 5 CHINA NPL MARKET REPORT Chapter 1:NPL Market Update “Chinas lenders will maintain the steady growth momentum in 2024,with financial resource allocation to be optimized further.The countrys sound long-term fundamentals will remain unchanged,and the improving fundamentals and new growth opportunities are expected to boost the development of the banking sector”.The China Banking and Insurance Regulatory Commission(CBIRC)1 and the Peoples Bank of China(PBoC)jointly issued Tighter Asset Risk Classification Rules for Commercial Banks On the 11th of February 2023,Chinas central bank and banking regulator updated Rules requiring commercial banks to evaluate and classify credit risk more promptly and prudently and prioritize debtors ability to meet their obligations over underlying collateral values.The updated Rules expands the existing five-category risk classification from loans to all financial assets exposed to credit risk,including bond investments,interbank lending,entrusted investments,and asset-backed securities,covering the risks of all their on-balance-sheet and off-balance-sheet financial assets that bear credit risk.The expansion of the scope of risk classification will have an impact on indicators such as the non-performing loan(NPL)rate and the provision coverage ratio.The Rules for risk classification of financial assets are intended to promote commercial banks to accurately assess credit risks and truly reflect the quality of financial assets.The Rules aim to further promote commercial banks to accurately identify risk levels and implement asset risk classification,which will help the banking sector effectively prevent and resolve credit risks and improve the level of serving the real economy.For some small and medium-sized banks with poor asset quality and weak risk-resistance ability,the Rules will bring about certain pressures during the implementation process,and the banks demand for the disposal of NPLs will be elevated.Comments:For asset management companies(AMCs),the scale of NPLs on the supply side will increase,and more opportunities for restructuring,mergers and acquisitions will arise,this is in addition to the growth of small and medium-sized bank bail-outs opportunities.On the other hand,the increased diversity of NPLs from commercial banks,the larger market size,and the difference in valuation and pricing logic from traditional NPLs,will pose higher professional requirements and challenges for AMCs.CBIRC Issued the Notice on Launching the Second Batch of NPL Transfer Pilot Project On the 30th of December 2022,CBIRC issued the Notice to expand the NPL transferor scope of the pilot project.Under the expanded pilot,continuing on the same basis as the initial pilot,China Development Bank,China Export-Import Bank,Agricultural Development Bank of China,as well as trust companies,consumer finance companies,auto finance companies and financial leasing companies are all included in the project;Besides the afore mentioned entities,city commercial banks and small and medium-sized rural banking institutions registered in Beijing,Hebei,Inner Mongolia,Liaoning,Heilongjiang,Shanghai,Jiangsu,Zhejiang,Henan,Guangdong and Gansu were also included in the scope.Comments:This expansion includes policy banks and non-bank financial institutions in the scope of the pilot program,enhancing the diversity of NPL sources.With the diverse degree of asset risk classes across the transferors within the pilot project,the degree of asset quality differentiation may be enhanced,and the transfer price will be further stratified,which further enriches the asset diversity in the market.A Number of AMCs Have Been Approved to Connect to Credit Reference Center System of PBoC Zheshang AMC,China Merchants Ping An AMC and several other licensed AMCs have been granted approval to connect to the Credit Reference Center System of PBoC,which will allow them to access the personal credit profiles.Comments:As the competition in the NPL industry intensifies,AMCs have begun to seek supply-side sources of expansion around the larger scope of NPLs,and the personal NPL business has become the choice of many AMCs.Connection to the credit reference system of PBoC is a necessary step for AMCs to carry out personal NPL business.Note 1 CBIRC was abolished in March 2023 as part of a plan to overhaul government agencies,being replaced by the National Administration of Financial Regulation(NAFR).Page|2 报告免费分享+V：R t h e 4 5 CHINA NPL MARKET REPORT Access to Financial AMCs 1 Further Eased On the 17th of November 2023,NFRA releases the Implementation Measures for the Administrative Licensing of Non-bank Financial Institutions.The new Measure,which will take effect on November 10th,allows overseas non-financial institutions to invest in financial AMCs,and abolishes the total assets requirement for overseas financial institutions to be investors of financial AMCs.Overseas non-financial institutions,as investors to a financial AMC,must have more than 10 years of experience in operating and managing non-performing asset investment and management.In addition,it must be in good financial standing and have made consecutive profits in the last 2 fiscal years;if it is the controlling shareholder of the financial AMC,it must have made consecutive profits in the last 3 fiscal years.The balance of equity investment shall in principle not exceed 50%of the net assets of the enterprise(including the amount of the current investment);as a controlling shareholder of a financial asset management company,the balance of equity investment shall in principle not exceed 40%of the net assets of the enterprise(including the amount of the current investment).The funds for equity participation must be own funds,and no non-own funds such as entrusted funds or debt funds is allowed for equity participation.Comments:Compared with the previous version,the biggest change in the new Measures is that overseas non-banking financial institutions are allowed to invest in financial AMCs,which is a relaxation of the previous restriction that overseas investment institutions must be financial institutions.In addition,the requirements for the total asset size of foreign investment institutions have been cancelled,but adding the requirements for net asset ratio,operating and management experience of non-performing asset institutions,and continuous profitability.Generally speaking,the overall requirements for foreign institutions to invest in financial AMCs have been relaxed,and more specific requirements have been put forward for investment institutions in terms of their professionalism in the field of non-performing assets and financial status.China Bond Yindeng Non-Performing Asset Exchange Center(Beijing)Co(CBY-NPLEx)Formally Completed the Change of Company Name from Huarong Zhongguancun Distressed Asset Exchange Co According to the companys website,CBY-NPLEx is a state-owned enterprise under the China Central Depository&Clearing Co.,Ltd.and held by the Banking Credit Assets Registration and Circulation Center Co.,Ltd.with a registered capital of RMB 500 million.CBY-NPLEx is a specialized asset exchange venue approved by the Government,with business scope of trading of non-performing assets(including debt,equity,physical objects,etc.)and other kinds of debt assets trading,enterprise management consulting,investment and financing information intermediary and brokerage consulting.On 13th of December 2021,China Huarong AMC completed the transfer of a 79.6%stake in Huarong Zhongguancun Distressed Asset Exchange Co to Yindeng Center,with a transfer price of RMB 323 million.Comments:Since the release of the Circular of the General Office of CBIRC on the Pilot Work of NPL Transfer in 2021 and the pilot programme of personal NPL transfer,Yindeng Center has become one of the mainstream NPL trading platforms.According to the data of the Yindeng Center,the current NPL transaction volume in the Yindeng Center account for a relatively high proportion of personal NPL portfolio trade.With the establishment of the CBY-NPLEx,the construction of Yindeng Centers NPL trading platform has been further promoted,and it is expected that the trading scale,asset types and counterparties will be further expanded.The State Commission Office of Public Sectors Reform(SCOPSR)Has Officially Released Provisions on the Functions,Structure and Staffing of NAFR The Provisions outlining the NAFRs functions,structure,and staffing,come on 10th of November 2023,two weeks after the twice-a-decade Central Financial Work Conference in Beijing.It proposes that the functions of taking the lead in cracking down on illegal financial activities within NAFR include To formulate a regulatory system for local financial organizations such as microfinance companies,financial guarantee companies,pawnbrokers,financial leasing companies,commercial factoring companies,provincial AMCs,etc.,and to guide and supervise the relevant operational work of local financial supervisory authorities.Comments:In the past,the supervision of provincial AMCs was the responsibility of the Department of Inclusive Finance in the CBIRC,and now it is the responsibility of the Bureau of Combating Illegal Financial Activities of NAFR,and the supervision of provincial AMCs has been explicitly included in the regulatory framework of NAFR.Previously,there is no unified regulatory system for provincial AMCs,and some provinces have introduced their own regulatory approach.Recently,the Interim Measures for the Supervision and Administration of Provincial Asset Management Companies have been released to the industry for comments,and it is expected that the regulatory approach for provincial AMCs will be introduced soon,and the degree of industry standardization will rise further.Note 1 The Financial Asset Management Companies refer to the national Big Five AMCs,i.e.,Cinda AMC,CITIC Financial AMC(formerly known as Huarong AMC),Great Wall AMC,Orient AMC,and Galaxy AMC.It is added that,on January 25,2024,China Huarong Asset Management Co.,Ltd.changed its name to China CITIC Financial Asset Management Co.,Ltd.,and other contents of the business license remained unchanged.Page|3 CHINA NPL MARKET REPORT Source:National Administration of Financial Regulation As of the end of 2023,the NPL balance of Chinas commercial banks was RMB 3.23 trillion(US$448 billion),an increase of RMB 243 billion year-on-year.Meanwhile,the NPL ratio of China commercial banks was 1.59%,a decrease of 4 bps compared to the end of 2022.In 2023,the overall asset quality of the banking industry remained stable,and major financial institutions continued their previous efforts to dispose of non-performing assets,and actively adopted a variety of means to prevent and resolve financial risks.Overall,in 2023,Chinas commercial banks continued to maintain the trend of rising NPL balances,decreasing NPL ratio,and gradually slowing down the pace of compression.The current economic landscape is complex and volatile,and some potential NPLs may be temporarily covered or delayed exposure,increasing the difficulty of risk prevention and control in the banking sector.Exhibit 1-1 NPL Balance in China Commercial Banks Note:FX rate of 1 USD:7.2 RMB 1.5%1.6%1.7%1.8%1.9%2.0%1.01.52.02.53.03.5181920212223Balance(RMB trillion)NPL BalanceNPL Ratio%Page|4 CHINA NPL MARKET REPORT Source:National Administration of Financial Regulation Note:Data for Gansu Province are for the third quarter of 2023;No available data form provinces of Inner Mongolia,Liaoning,Hubei,Yunnan,Tibet,Shaanxi,Qinghai,and Ningxia Based on the latest reported data in each provincial branch of the NAFR,the NPL balances and ratios are displayed as above(data of some provinces is not disclosed).It is evident that in the provinces of Gansu,Hainan,Heilongjiang,Jilin,and Hebei,the NPL ratio is at an extremely high level.The NPL ratio in other provinces are relatively manageable,especially in the provinces that foreign investors have shown the most interest in,including Jiangsu province(0.70%),Zhejiang province(0.62%),Guangdong province(1.35%),and Fujian province(1.15%).Total NPL Ratio(%)in Banking Industry|2023 3%2%-3%1%-2%1%Not disclosed 10 11 Exhibit 1-2 Provincial NPL Balances(RMB billion)and Ratios by the end of 2023 235.7 174.0 165.4 134.9 125.2 116.6 110.8 106.3 99.8 94.8 86.2 75.9 79.0 74.5 71.1 66.9 59.8 58.8 58.2 52.7 44.4 36.8 19.0 Guangdong(1)Hebei(2)Jiangsu(3)Zhejiang(4)Shandong(5)Sichuan(6)Beijing(7)Shanghai(8)Gansu(9)Fujian(10)Hunan(11)Anhui(12)Jiangxi(13)Guangxi(14)Guizhou(15)Chongqing(16)Henan(17)Heilongjiang(18)Tianjin(19)Shanxi(20)Jilin(21)Xinjiang(22)Hainan(23)Page|5 CHINA NPL MARKET REPORT Chapter 2:Overview of Recent NPL Transactions “The number of NPL transactions was at a high level in 2023 and is expected to increase in 2024 due to the increasing supply volume.With the situations of banking sector grappling with a real estate crisis,local government debt woes and rising individual delinquencies as Chinas post-Covid recovery fades,under Governments requirements of accelerating the disposal of NPLs to fend off systemic financial risks,the NPL market will still be promising in the coming years.Starting from 2024,we add market trade information for personal NPLs as you can see in Page10-11.Overall,the Personal NPL Market is increasingly attracting investors attention after the pilot program expanded with far more players of financial institutions”Note:data in chart is generated daily by calculating the latest 30-day moving average of the volume of bid or transaction cases Source:Public Information,Zheshang Asset Research