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Home > Business/Finance > Financial Services > Banking
China Commercial Banking Report Q3 2007
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Key Issues
This quarter we have updated a lot of the numeric information in the banking reports. We now have final banking statistics, sourced from the central bank/regulator or trade association, in relation to the end of 2006 for all countries other than Iran.
All of the commercial banking reports need to be considered in the context of a global environment that was benign for banks in the vast majority of the 59 countries for which have collected data. In 2006 the median local currency growth in total assets was 17.2% (in Croatia). The median local currency growth in total loans was 18.2% (in Bangladesh). The median local currency growth in total deposits was 16.9% (in Algeria). In almost all countries local currencies were stable or rising relative to the US dollar. Except in Venezuela and Iran, figures were not distorted by double-digit inflation.
Loan/deposit, loan/asset and Loan/GDP ratios all provide a rough measure of the development of the banking systems. Across the 59 countries for which we have collected data, the median loan/deposit ratio is 85.1% (in Thailand). The median loan/asset ratio is 54.8% (in Romania). The median loan/GDP ratio is 53.4% (in Kuwait). Across the eurozone, by comparison, the equivalent numbers are 126.4%, 50.6% and 119.3%. All three ratios are rising in most of the countries for which we have collected data.
GDP growth has persisted in recent times, indicating a strongly performing Chinese economy. A strong reliance on exports, however, still presents a risk, especially when considered in relation to a slowing US economy.
BMI predicts that China will achieve a very respectable GDP growth rate of around 10% for the period 2007-2011.
Some measures are being taken to slow growth, although a general slowdown in investment and industrial production has led to an easing of inflationary pressures.
China’s Loan/Deposit Ratio is relatively low and falling (68.5%) - which, in line with other key indicators, suggests that Chinese banks are experiencing trouble recycling deposits as loans.
China’s banking system cannot be ignored. It’s now of such as size that internal developments can have global implications.
The banks’ holdings of bongs are relatively small as a portion of total assets (around 12%); this suggests that the banks do not see the government as a particularly attractive credit risk at present.
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