Further bank reforms planned
Banking supervision played an important role in assisting the State's macro management last year, while major improvements were achieved to strengthen the nation's banking regulatory system.
The China Banking Regulatory Commission (CBRC) also said on Friday more reform measures are in the pipeline this year, including pressing ahead with joint-stock reforms of the Industrial and Commercial Bank of China (ICBC), broadening reforms of rural credit co-operatives and initiating key reform measures to the postal savings system.
Enhanced supervision helped slow down last year's excessive loan growth to levels that basically met the appropriate funding needs of businesses, Chairman Liu Mingkang told the commission's annual conference that ended on Friday.
Excessive fixed asset investment in some overheated sectors fuelled expansive increases of bank loans in the past two years, leading to worries about an overheated economy and growing financial risks.
But annualized loan growth was brought down to 14.4 per cent at the end of last year from the recent-year peak of 23.9 per cent recorded at the end of August 2003, CBRC figures showed.
New loans granted last year totalled 2.41 trillion yuan (US$290 billion), down 31 per cent from the previous year.
"The reality has shown that prudential supervision played an important role in the macro management," Liu said.
Meanwhile, Chinese banks made considerable progress in their efforts to build long-term risk management mechanisms.
Major domestic banks issued a combined 73.7 billion yuan (US$8.8 billion) in subordinated bonds, which helped raise their aggregate capital adequacy ratio by 2.23 percentage points from one year earlier, the official said.
Twenty-one banks met the 8 per cent minimum requirement of capital adequacy at the end of the year, with their assets accounting for 44.6 per cent of all banking assets.
At the beginning of last year, only eight banks, which accounted for a meager 0.56 per cent of the banking sector in terms of assets, could meet the minimum requirement.
This year, Liu said his commission plans to bring more banks up to the capital adequacy requirement, so that all of the qualified banks in terms of capital adequacy ratio can account for a targeted 70 per cent of all banking assets.
The commission will also strive to ensure that banks do not base their lending decisions on the size of borrowers, or their ownership structures, he said.
Chinese banks, especially the large State-owned ones, have favoured larger businesses in their lending operations.
They have particularly been criticized by some economists as truncating funding support to the smaller and privately-owned businesses during last year's macro management.
Liu said his commission will press ahead with the joint-stock reform of the ICBC this year "in accordance with the State Council's arrangements," but he did not elaborate.
The ICBC, China's largest State-owned commercial bank, is reportedly expecting final approval from the State Council, or the cabinet, on its reform plan by the end of next month.
The reform plan is expected to include a huge recapitalization by the Chinese Government, and detail steps of a joint-stock restructuring that will lead to a public share offering.
The commission will start reforms of rural credit co-operatives in a second batch of provinces, Liu said, following last year's successful experiments in eight selected provinces.
The authorities are restructuring the nation's more than 30,000 struggling rural credit co-operatives, which turned in their first aggregate profit last year in 10 years.
Twenty-three rural commercial banks and co-operative banks have emerged from restructuring in the eight selected provinces, while another 25 have obtained approval.
More efforts will also be made to reform the postal savings system, including broadening the investment scope of such funds collected at the nation's numerous postal outlets.