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China CITIC Bank sees improved market confidence

By Jiang Xueqing | | Updated: 2023-03-24 20:29
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Recent policy changes in China's real estate sector have mainly put greater emphasis on the importance of the sector to the Chinese economy and have shift from protecting quality housing projects to protecting both quality housing projects and quality entities, said a senior executive of China CITIC Bank.

China still adheres to the principle that "housing is for living in, not for speculation" while continuing to support a healthy development of the real estate sector, said Hu Gang, vice-president and chief risk officer at China CITIC Bank, a national joint-stock commercial lender.

"After the Spring Festival, sales of second-hand homes in 18 major cities have rebounded, which has increased market confidence in China's real estate sector. We believe that the trend of risk spreading in the housing sector has been contained, and the liquidity condition of real estate developers has improved significantly," said Hu at a media conference announcing annual results of the bank on Friday.

"Now, the key is to see changes in market confidence and housing demand, which mainly rely on the sales of new homes. If the sales of new homes pick up, we will see an upward trend in the real estate sector. During the process, however, risks may occur at some real estate developers with relatively high debt ratios and poor project layouts," he said.

Last year, in regard of corporate real estate financing, China CITIC Bank's assets assuming credit risks totaled 373.4 billion yuan ($54.4 billion), including 277.2 billion yuan of real estate development loans and 96.3 billion yuan of financing that assumes credit risks, such as structured financing, bond investment, non-standard wealth management financing and traditional off-balance-sheet business. The bank's nonperforming loan ratio of this type of assets was about 3.08 percent, Hu said.

Its personal real estate financing amounted to 1.38 trillion yuan, with the NPL ratio of 0.63 percent. Its personal mortgage loans reached 975.8 billion yuan, with the NPL ratio of 0.42 percent. Its personal loans using homes as collateral amounted to 384.3 billion yuan, with the NPL ratio of 1.08 percent, Hu said.

In the first quarter of this year, China CITIC Bank's credit extension has exceeded its limit in the first half during the past few years, said Fang Heying, vice-chairman and president of the bank.

"There may be some factors of a good start at the beginning of the year, and the bank's credit extension is expected to gradually stabilize later. However, the overall demand for credit is going up, which is a general trend this year," Fang said.

Against the backdrop of China's high-quality development, new energy, new materials, green and low-carbon development, specialized and innovative industries, and strategic emerging industries still remain the focus of national policies and the main areas of China CITIC Bank's credit demand, he said. As investment will still be a driver for China's economic growth this year, infrastructure and its supporting financing may remain as important sources of credit demand. In addition, real estate credit demand is also stabilizing, he said.

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