Big banks all aboard amid stability drive, increasing liquidity

Several large and medium-sized banks in China made arrangements recently to ramp up credit issuance in an effort to stabilize the economy and keep economic activity within a reasonable range.

Industrial and Commercial Bank of China, the country's largest State-owned commercial lender by assets, will implement policies launched by central and local governments, make full use of various policy instruments and financial products, and focus on key regions, key fields, key industries and weak links in the economy.

ICBC will take proactive steps, offer loans to those who meet its requirements, and issue loans as early as possible to make greater contributions to economic stabilization, according to decisions made at a recent meeting held by the bank.

China Construction Bank, another large State-owned commercial lender, said it will focus on priority areas of the economy, adopt precise measures, strictly implement bailout policies, expand effective investment and take multiple measures to stabilize trade and foreign investment.

CCB will help enhance competitiveness of key regions, including the Beijing-Tianjin-Hebei region, the Yangtze River Delta region and the Guangdong-Hong Kong-Macao Greater Bay Area. At the same time, it will guide large flows of financial resources to central, western and northeastern regions of the country.

Bank of China said it will make an all-out effort to increase lending to key areas of the economy, support reasonable financing needs in the real estate sector, and give full play to its advantages in providing assistance to the stabilization of trade and foreign investment.

BOC will continue to give financial support to companies facing temporary operational challenges due to COVID-19, strengthen services to safeguard people's livelihoods, make flexible adjustments to repayment arrangements for mortgage loans, and defer repayments on loan principal and interest for eligible market entities and individual clients.

Postal Savings Bank of China said on Monday it will continue to step up financial support for issues related to agriculture, rural areas and farmers, micro and small enterprises, as well as other weak links and major areas of the economy, such as water conservancy, transportation and energy projects.

Its branches at all levels should fully utilize lending policies and measures launched by the PSBC head office and improve stability and sustainability of credit growth.

China CITIC Bank, a national joint-stock commercial lender, said on Tuesday it will continuously expand the scope of loan subsidies, optimize its performance evaluation policies, and make dynamic adjustments to funds transfer pricing (FTP) rates assigned to different types of loans.

FTP is a method used by banks to measure how each source of funding contributes to its profitability and to evaluate the performance of its business units. By cutting its FTP rate for inclusive loans, for example, a bank will be able to offer loans to small businesses at lower rates.

China Everbright Bank, another national joint-stock commercial lender, will increase lending to key areas, including micro, small and medium-sized enterprises, green development, sci-tech innovation, and projects guaranteeing energy supply.

CEB said its top priority this year is to achieve steady credit growth and a larger increase in lending year-on-year. In addition, it will keep promoting reductions in the comprehensive financing costs of enterprises.

Liu Linan, head of China macro strategy at Deutsche Bank, said infrastructure construction and green development should be the main focus of China's credit policies. In the meantime, the country should also keep giving firm support to logistics, clean energy and power sectors.

"China has provided sufficient liquidity to support credit growth. We hope that this will eventually bring credit expansion and make a series of positive growth impacts," Liu said.