Things are looking quite rosy for the Chinese banking sector these days, certainly a lot rosier than they did 8 years ago when the whole system was on the brink of collapse.
The Washington Post reports that non-performing loans now constitute only 7.5 percent of total lending. That may sound like a lot, and it is by local standards, but at the turn of the century the figure was estimated by certain observers to be as high as 40%. Only a massive multi-billion dollar government bailout kept the Big Four (BOC, ICBC, BOC and AgriBank) afloat.
Meanwhile, the IHT highlights the improved profit performance of the country’s major lenders, another indicator of the health of the system. The increased profit has, of course, been fuelled by a lending boom over the last 12 months, a boom that the government is now trying to rein in. This will obviously have an effect on profits but nevertheless, shares in BOC have risen 16.6% since their opening in Hong Kong in May, and 6% on the mainland since the start of July.
Hopefully, this means that the banks can now refocus their attention on reforming basic customer services. If they don’t, they will surely be put under intense pressure by the more efficient and better organised foreign banks who will enter the market at the end of this year, in accordance with WTO agreements.
(This blogger spent 1 and a half hours today [that’s 90 long and tedious minutes, 5,400 hair-greying seconds] in a not-busy Beijing branch of BOC attempting the fairly straightforward task of opening a simple savings account. Five minutes were spent filling out the necessary paper. Your corresspondent then spent the next 85 minutes watching in amazement as 3 cashiers dealt with a combined total of 15 customers while disregarding the pontential new client who was edging ever closer to the door and suppressing a very strong desire to stage a hostile coup of the bank and install himself as leader of a management junta.)
