SCIO briefing on reform and development of China's banking and insurance sectors in 2020
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E-mail China.org.cn, January 25, 2021
Speakers:
Liang Tao, vice chairman of the China Banking and Insurance Regulatory Commission (CBIRC)
Xiao Yuanqi, chief risk officer and spokesperson of the CBIRC
Chairperson:
Shou Xiaoli, deputy head of the Press Bureau of the State Council Information Office
Date:
Jan. 22, 2021
Shou Xiaoli:
Ladies and gentlemen, good afternoon and welcome to this press conference. Today, we are delighted to invite Mr. Liang Tao, vice chairman of the China Banking and Insurance Regulatory Commission (CBIRC), to brief you on the reform and development of China's banking and insurance sectors in 2020 and answer your questions. Alongside him is Mr. Xiao Yuanqi, chief risk officer and spokesperson of the CBIRC. Now, I would like to give the floor to Mr. Liang Tao.
Liang Tao:
Good afternoon, friends from the media. Thank you for your interest in and support for the work of the CBIRC. Let me first brief you on the reform and development of the banking and insurance sectors in 2020. 2020 was an extraordinary year. Under the strong leadership of the CPC Central Committee with Comrade Xi Jinping at its core, the banking and insurance sectors have worked hard to overcome the impact of the epidemic, responded to various risks and challenges, and continued to maintain sound operations. New achievements have also been made in reform and development.
First, assets and liabilities increased steadily. At the end of 2020, banking institutions saw their total assets reach 319.7 trillion yuan, up 10.1% year on year. Meanwhile, their total liabilities were 293.1 trillion yuan, up 10.2% year on year. The total assets of insurance institutions reached 23.3 trillion yuan, up 13.3% year on year; primary insurance premium income was 4.5 trillion yuan, up 6.1% year on year; and the balance of insurance funds was 21.7 trillion yuan, up 17% year on year.
Second, the quality and efficiency of serving the real economy continued to improve. In 2020, RMB loans rose by 19.6 trillion yuan, an increase of 2.8 trillion yuan over the previous year. Loans to private enterprises and manufacturing increased by 5.7 trillion yuan and 2.2 trillion yuan, respectively. Inclusive loans received by small and micro firms, loans to firms engaged in scientific research and technology services, and loans to firms engaged in information technology services increased by 30.9%, 20.1% and 14.9%, respectively. New bond investment of banks and insurance institutions reached 9.5 trillion yuan. The insurance sector provided 8,710 trillion yuan worth of insurance, an increase of 34.6% year on year; and the sector made a combined compensation of 1.4 trillion yuan, up 7.9% year on year.
Third, key business and risk indicators were kept within an appropriate range. In 2020, China's banking sector disposed of 3.02 trillion yuan in non-performing assets. As of the end of 2020, the balance of non-performing loans (NPLs) was 3.5 trillion yuan, up by 281.6 billion yuan from the beginning of the year; the NPL ratio was 1.92%, a decrease of 0.06 percentage points from the beginning of the year; and the ratio of loans overdue more than 90 days to NPLs stood at 76%, down 5.1 percentage points from the beginning of the year. The overall liquidity of banks and insurance institutions remained stable. The liquidity coverage ratio of commercial banks was 146.5%, and the cash flow from operating activities of insurance companies increased by 106.5% year on year.
Fourth, the ability to defuse risks has been strengthened through multiple channels. In 2020, 1.34 trillion yuan of commercial bank capital was supplemented through the issuance of preferred stock, perpetual bonds and tier 2 capital bonds. The banking sector set aside 1.9 trillion yuan in loan loss provision, an increase of 113.9 billion yuan year on year. At the end of 2020, the provision coverage ratio (PCR) stood at 182.3%, and the loan loss provision coverage ratio was 3.5%, both maintaining relatively high levels. According to preliminary statistics, commercial banks achieved a net profit of 2 trillion yuan, a decrease of 1.8% year on year. At the end of 2020, the capital adequacy ratio of commercial banks reached 14.7%. At present, the comprehensive solvency adequacy ratio of insurance companies stands at 242.5%, and the core solvency adequacy ratio at 230.5%.
Fifth, positive progress has been made in the reform and opening-up of the banking and insurance sector. We have been working continuously to facilitate and improve corporate governance of banking and insurance institutions, better incorporating CPC leadership into corporate governance, strictly regulating equity management, and strengthening supervision efforts and performance duties amongst directors, supervisors, and senior management. We have issued a working plan on the further reform and supplementing capital for small- and medium-sized banks and comprehensively promoted the reform and risk-resolving efforts amongst commercial banks in cities and credit cooperatives in rural areas. We have also promoted the reform of insurance mechanisms, publishing guidelines for the overall reform of auto insurance, studied the facilitation of China's third pillar pension insurance system and accelerated reforms in accident and agricultural insurance. We have also steadily expanded the opening-up of the financial sector, working to implement policies that promote opening-up and proactively review applications for market access by foreign-funded institutions. Since 2018, applications from foreign banks and insurance companies have been approved to allow them to establish nearly 100 various institutions in China.
The CBIRC will hold a meeting next week on the national supervisory works and make comprehensive plans for 2021. We will resolutely adhere to the centralized and unified leadership of the CPC Central Committee with regards to the financial sector based on China's new development stage and new development philosophy, and contribute to building a new development pattern. We will work to ensure stability on the six fronts and maintain security in the six areas, deepening supply-side structural reform in the financial sector and promote higher-level opening-up. We will also continue to prevent and resolve financial risks, further improve the quality and efficiency of the financial sector's ability to serve the real economy, and continue to make breakthroughs in the regulatory work of the banking and insurance sector. Thank you.
Shou Xiaoli:
Thank you, Mr. Liang. Now the floor is open to questions. Please identify your news outlet before asking questions.
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