China Development Bank loan growth at four-year low

Fri May 16, 2014 3:19am EDT

Related Topics

* Loan growth slows to 9 pct in 2013 from 20 pct in 2012

* Government wants to prevent excess credit growth

* CDB focused on urbanization, industrial re-structuring

* Profit rises 27 pct on higher fee income

By Gabriel Wildau

SHANGHAI, May 16 (Reuters) - China Development Bank Corp (CDB), China's biggest policy lender, reported its weakest annual loan growth in at least four years on Friday, highlighting government efforts to slow credit growth and allow market forces to determine who gets financing.

China's policymakers have said they intend to control credit growth to stymie the buildup of financial risk and shift the economy's expansion model away from excess reliance on investment fuelled by cheap loans.

CDB has been central to investment-led growth. The non-commercial bank issues loans for large infrastructure projects and companies' overseas expansion. It also lends to foreign governments.

Loans at the bank grew 9 percent in 2013 from 20 percent in 2012, according to Reuters calculations based on CDB's annual report.

"CDB supported new urbanization with new and innovative models for financing shantytown renovation and transportation infrastructure, including rail, road, and metro systems," the bank said in a statement on Friday.

CDB issued almost one trillion yuan ($161 billion) in urbanization-oriented loans last year, the bank said. Total loans reached 8.19 trillion yuan.

"CDB promoted industrial restructuring through lending to strategic and emerging industries, environmental and energy-efficiency projects, and cultural and creative sectors; as well as through the reduction of excess capacity via consolidation in key industrial sectors," the bank said.

Outstanding foreign currency loans rose 14 percent to $250.5 billion and comprised about 21 percent of CDB's total loan book. Taking exchange-rate movement into account, the proportion of outstanding foreign currency loans was little changed from 2012.

Growth in liabilities was also the slowest in at least four years. CDB does not take deposits and funds itself primarily through bond sales in China and overseas.

In terms of financial risk, CDB said its non-performing loan (NPL) ratio rose to 0.48 percent from 0.40 percent, but stayed below the 0.68 percent of 2010 and well below China's system-wide NPL ratio for commercial banks of 1.00 percent at end-2013.

Despite slowing loan growth, net profit rose 27 percent to 79.9 billion yuan, due in large part to a 22 percent rise in fee income.

"While maintaining its market leader position in loan syndication, the Bank achieved excellent growth in securities underwriting, settlement business, guarantee services, wealth management and bills," CDB said in explaining the fee growth.

($1 = 6.2306 Chinese Yuan) (Editing by Christopher Cushing)

FILED UNDER: