Kunpeng Project
Since the beginning of 2024, China's listed banks have frequently issued research announcements, attracting intensive attention from many institutions. As of January 31, 7 banks, including Bank of Suzhou, Sunong Bank, Bank of Ningbo, etc., have ushered in a total of 33 institutional surveys. This phenomenon reflects the challenges and opportunities facing the banking industry.
In this intensive round of research, institutions focused on core issues such as future asset quality trends, credit delivery status, and interest rate spreads. These issues are directly related to the profitability and risk management of banks. Judging from the survey, the banking industry has sufficient credit reserves in 2024 and has performed well at the beginning of the year, and is neutrally optimistic about credit allocation throughout the year. At the same time, banks are constantly improving their risk management systems to improve the effectiveness of asset management and risk mitigation.
In this round of survey, banks showed optimism about the outlook for credit provision. Despite the relatively weak demand at the retail end, the high base in the same period last year, and the continued decline in interest margins, banks still plan to actively carry out good starts. This indicates that banks are actively looking for opportunities to ensure the growth of their loan portfolios and respond to market uncertainty.
In the survey, the banking industry emphasized the continuous improvement of the risk management system. This includes further refining credit and approval strategies to ensure an efficient and compliant lending process. In addition, banks are also strengthening the control and risk mitigation of credit assets to cope with possible risks in subdivided areas.
Industry analysts and brokerage institutions generally believe that banks are expected to increase their investment in the good start to make up for the operating pressure caused by weak retail demand, a high base in the same period last year and a continuous decline in interest margins. Although there will not be a large-scale risk exposure, the risks in sub-sectors still need to be paid attention to, especially for long-tail customers such as small and micro enterprises and retail businesses. This will become the focus of banks' risk management and control in the next two to three years.
While the banking sector is widely not expected to see large-scale asset quality issues in 2024, risks in sub-sectors need to be closely watched. The bank will continue to strengthen the disposal of non-performing assets and risk mitigation to ensure the stability of asset quality. In addition, banks will continue to optimize their credit policies to reduce potential risks.
One challenge for banks is the relative weakness of retail demand. In the current economic climate, individuals and households are likely to be more cautious and have a lower need to borrow. This means that banks need to find more innovative ways to stimulate demand at the retail end while maintaining their profitability.
*Policy support and the regulatory environment will also impact the development of the banking sector in 2024. **Possible measures to encourage credit access and support the real economy, while also closely monitoring banks' risk management and compliance. Banks need to strike a balance between policy and regulatory pressures to ensure the sustainability and legitimacy of their operations.
The banking industry will continue to advance digital transformation to improve service efficiency and customer experience. Digital banking and financial services will continue to expand, and banks need to adapt to this trend to meet the diverse needs of their customers. Digital transformation will also help banks better manage risk and data analytics to enhance decision-making.
The year 2024 is full of opportunities while facing a series of challenges. Intensive research shows that banks are actively responding to market changes and are expected to take steps to increase credit supply, improve risk management systems, and address asset quality issues. In the future, banks will need to continue to find innovative ways to create growth and adapt to the trend of digital transformation. **Policy support and regulation will play an important role in the development of the banking industry.
Banks also need to pay close attention to retail demand, segment risks, and uncertainties in the global economic environment. Only through agile strategic alignment and firm risk management will banks be able to achieve solid growth in 2024 and provide better financial services to their customers while ensuring their own sustainable development. This year will be full of challenges and hope for the banking industry.