Provisions of state-owned banks have room for reduction
As of December 31, 2021, the average provision coverage of large commercial banks has reached 239.22%, higher than that of joint-stock banks, urban commercial banks and rural commercial banks. Among them, the coverage rate of Postal Savings Bank Of China Co.Ltd(601658) provision of state-owned banks is the highest, reaching 418.61%. Under the background that the provision coverage rate is much higher than the regulatory level, the provisions of large state-owned banks have room for reduction, and the risks brought by reducing the provisions are at a controllable level.
Reducing provisions will help release profits, expand the space for banks to make profits to the real economy and reduce the pressure on banks.
Large banks have large profit margins with higher provisions. It mainly includes two aspects: first, reducing the provision helps to improve the profit of bank statements, ensure the growth trend of bank profit and alleviate the operating pressure caused by profit transfer; Second, it can strengthen endogenous capital, expand the scale of available funds for credit and reduce the cost of funds.
The probability of reducing the reserve requirement is greater than the interest rate, stabilizing the basic operation of banks.
The national standing committee did not mention the interest rate cut to further stabilize the stable expectation of Bank net interest margin. By increasing the available capital of banks, reducing the cost of liabilities and reducing the adverse impact of the real economy on the banking industry.
Carefully use interest rate cutting tools to prevent capital outflow.
The national standing committee did not mention the use of interest rate cutting tools to release liquidity. In addition to considering from the perspective of bank operation, preventing capital outflow is one of the important reasons. Recently, the interest rate gap between China and the United States has narrowed or even upside down, which has caused some foreign capital outflow. When the policy tools are relatively surplus, the interest rate cutting tools will be used carefully.
Risk tips
The implementation effect of the policy was not as expected, the epidemic situation deteriorated and international relations deteriorated.
