China's online banking and mobile banking continue to be the key channels for customers who interact with their banks through 'e-channels' as data from iResearch, a Chinese online customer survey service provider, shows.

According to Online Lending House, an internet finance news source, P2P transaction volume has reached RMB 81.84 Billion in 1H2014. The most active regions are Guangdong, Zhejiang, Shanghai, Beijing and Jiangsu.

Direct Banking model Favored by City Commercial Banks

Written by Fiona Zhao || August 26 2014

Earlier this year, we published our 2014 “Top-10 China Banking Industry Trends” report and predicted the advent of direct banks. We were right: in a month Minsheng Bank rolls out its Chinese direct banking institution.

On July 25th, Shang Fulin, the chairman of CBRC, disclosed three private banks that had been approved by the CBRC. Hua Rui Bank, planned to be set up by Fosun and Juneyao, was not on the list. Later the Shanghai branch of CBRC revealed that the Fosun and Juneyao partnership had broken up.

Kapronasia's new report entitle "China Moving Abroad - A look at the legal...and not so legal ways Chinese nationals are moving their money abroad" is now available for download on Kapronasia.com. To view and download the report, please go to our research section here.

Alibaba Teams up with Banks to Launch Unsecured Loans

Written by Fiona Zhao || August 12 2014

On July 22nd, 2014, Alibaba teamed up with seven banks including ICBC, CCB, CMB, Ping An Bank, Postal Savings Bank of China, Bank of Shanghai and Industrial Bank to roll out new internet business loan service.

Will VTMs disrupt the ATM industry in China?

Written by Fiona Zhao || August 08 2014

China has been going through rapid urbanization during last decades and in the past ten years alone the percentage of population residing in cities has leapt from 40.5% in 2003 to 53.75% in 2013.

The “Notice on Government-set Prices and Government-Guided Prices for Commercial Banking Services”, published by National Development and Reform Commission (NDRC) and China Banking Regulatory Commission (CBRC), is effective on August 1st, 2014.

Private Banks and China now liberalizing - New opportunities?

Written by Diego Castillo || August 06 2014

China is beginning to open its financial sector with the approval of three privately owned banks, extending the wave of financial reforms aimed at boosting China's changing economy.

Talks China – US - July 2014

Written by Diego Castillo || July 24 2014

Earlier this month, the US and China held their annual talks in Beijing, where they discussed trade, economic, regional, and political concerns.

Kapronasia's ATMs in China 2014 webinar and slides are now available in the webinar section of the website or by clicking here

Chinese Banking Technology: Brilliance Technology Lists

Written by Denis Suslov || July 16 2014

Currently there are 637 companies on the IPO list in China and their prospectuses, published by the China Securities Regulatory Commission, reveal business intelligence, previously not available for public.

Foreign Banks in China: Steady Growth

Written by Denis Suslov || July 11 2014

PBoC’s 2013 annual report shows that foreign banks in China showed steady growth and even outpaced GDP growth in terms of new deposits, but still lag their domestic competitiors.

P2P Platforms Face Troubles

Written by Fiona Zhao || July 09 2014

According to Wangdaizhijia, a resouce on the P2P industry in China, there are 148 P2P platforms in total closing, already closed or facing difficulties in redemptions.

Tremendous Growth in China’s P2P Lending Platforms

Written by Fiona Zhao || July 09 2014

The latest 2014 China Online Lending Industry Report reveals that China's P2P lending platform industry has grown rapidly both in terms of number of providers and turnover.

In the 2013 annual report issued by the Peoples Bank of China (PBOC), the organization addressed the issues related to the Internet finance. What is the forward looking Internet finance strategy?

On March 1st, 2014, Shanghai FTZ has removed the cap for foreign currency deposit rates, which apply to small accounts with less than USD3 million. After the three-month pilot, the market seems to be running steadily and enterprises in the Shanghai FTZ now can ask for higher rates for their forex deposits with the banks.

With the increasing usage of mobile devices such as smartphones and tablet PCs, mobile internet is becoming a new traffic entry point for many internet players. Alibaba's free wifi deployment will facilitate their entry point.

Chinese Banks Boost Their Tier 2 Capital

Written by Fiona Zhao || June 18 2014

The 2014 year seems to be a year for banks to pad their capital base. Previous heated discussion was around Tier 1 capital sufficiency, after which additional capital has been supplemented via issuing preference shares by SPDB, Bank of China and Agricultural Bank of China.

Should you worry about the security issues in China?

Written by Peng Wang || June 10 2014

People prefer to keep their information in a safe place, so do nations. After the PRISM scandal information security issues has become a concern for many countries.

On April 20th, the CEO of ICBC, quoting data from internal sources, claimed that the estimated scale of shadow banking in China is around RMB15-20tn, which is relatively small in scale to GDP when compared to shadow banking in more developed countries.


In addition, the leverage used in the Chinese shadow banking industry is not as large as other countries, so he argued that it is not necessary to worry about systematic risks in the Chinese financial system, but he still admitted there are non-systematic risks caused by shadow banking industry.

However, many independent financial analysts say that the scale and risk involved of shadow banking are underestimated and there might be increasing number of events happened in 2014 around shadow banking in China.

Shadow Banking in China Big Part of GDP 2014

In recent years China's mobile internet has been developing quickly and had a great impact on people’s lives. The official figures show that by the end of 2013, China had approximately 500 million mobile internet users, a 25% increase over 2012. With the penetration of smartphones in China more users prefer to use mobile devices to deal with many daily tasks. 

Future of the rising government debt in China

Written by Denis Suslov || April 16 2014

Last month, Shanghai Chaori Solar Energy Science & Technology became the first company to default in China's bond market when it failed to make a full payment on the issued debt. This shows that the Chinese state is not going to back up even big private borrowers. Several other companies are also on the verge of debt insolvency, according to local media sources, with government debt also on the rise.

Accroding to the latest figures from the CBRC (China Banking Regulatory Commission), Chinese banks’ asset quality deteriorated as the balance of bad loans continued rising from RMB 492.9 billion in 2012 to RMB 592.1 billion in 2013. However, as banks wrote off significant amounts of bad loans in 2013, the bad loans ratio grew only slightly from 0.95% to 1%, leaving the asset quality in relatively good shape. The largest outstanding bad loans are from the big five banks, who have hit a 10 year peak of bad loans - in total, they have written off RMB 59 billion up significantly from 2012. 

The large amount of write-offs prevent the bad loan ratio from growing fast. In addition, Chinese banks have a relatively higher provision coverage ratio, so they are able to write off more. As China is in the middle of an economic transistion, we estimate that banks’ bad loans will continue rising as exports continue to slow and industry shifts excess capacity. Further 2014 write-offs will be supported by the CBRC’s latest guidance.

20140410 BadLoanWriteoff

Special 'Bad Loan Development Zone' in the Yangtze?

Written by Fiona Zhao || April 07 2014

Once known for its economic development zone, the rich Yangtze river delta now has become a hotbed for something else: non-performing loans. 

The latest data from big five banks’ 2013 annual report shows that the cumulative profits in 2013 were RMB 870.3 Billion, accounting for approximately 60% of the banking industry. However, comparing with previous years’ performance, the net Chinese banks' profit growth rate of 2013 has slowed with the exception of BOC, which increased slightly. This decreased profitability is mainly due to narrowed net interest margin. Last year, in the context of interest rate reform and the influence from money funds, banks have been facing challenge and forced to transform. This will likely continue to become more pronounced in the future as banks are heavily reliant on interest income rather than fee income. 

China Big Five Bank Profits Continue to struggle

How should China's Online Finance platforms be regulated?

Written by Zennon Kapron || March 24 2014

This past weekend Alibaba and Baidu met with the People's Bank of China (PBOC) in a closed door session to discuss the ongoing challenges with Chinese online finance regulation. The fact that the regulators are consulting with the industry is a great sign that the regulations will (hopefully) be built on consultation and discussion, and as both Baidu and Alibaba have intentions of setting up their own private banks, it's likely in their best interest to sit down with the regulators as well.

Chinese banks start to push back against money funds

Written by Kapronasia || March 17 2014

Over the past week news headlines have been awash with how Chinese banks are pushing back against Alibaba's Yuebao and Laicitong as the online finance products have rapidly grown their AUM at the expense of bank deposits. The banks now are expanding their push though and are challenging money funds' market share in China.

RMB/USD spot fluctuation range increase to ±2%

Written by Kapronasia || March 17 2014

On March 15, 2014, the PBOC announced that the daily RMB/USD exchange rate float range in the Chinese interbank market would increase to ±2%, which will be implemented on March 17. The chart below shows the expansion of fluctuation range for RMB/USD spot, which is meaningful to Chinese FX market.

Analysts from Kapronasia believe that it is an important step towards fully internationalization of RMB. The data below also illustrate that Chinese government is accelerating the process of internationalization of RMB. We are looking forward to further FX market reform, in the Shanghai Pilot Free Trade Zone, or in the whole country in 2014.  

 

RMB interbank spot rate

In another foray from the Internet giant into high finance, Alibaba recently announced that one million virtual credit cards will be issued next week. 

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