China Financial Daily:National Financial Working Conference to be Held in Mid-July

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    National Financial Working Conference to be Held in Mid-July (Sina, July 6)The five-year a time Financial working conference is said to be held in mid-Julythis year (likely on July 14), which may involve major financial reform agenda,local media reported. All major financial regulators including PBOC, CBRC,CSRC, CIRC and provincial governors will attend the meeting. The report saidChina may set up a financial coordinating committee on top of current financialregulation framework to improve regulation efficiency.

    Small-Sized Banks Continue to See Asset Quality Deterioration (Sina, July 5)

    Overall 1H17earnings growth saw recovery in Chinese banking industry, butsome small sized-banks have continued to experience meaningful asset qualitydeterioration, dragged by slowing-down regional economy, over-concentrationin problematic sectors, ie., Guiyang Rural Commercial Bank reported 29.99%overdue loan ratio as of 1H16; Liuzhou Bank reported 27.87% specialmentioned loan ratio; Bank of Hankou and Laishang Bank’s overdue loan alsoclimbed to 10.44% and 14.58% of total loan respectively as of end-2016. ForLiuzhou Bank, its largest borrower accounted for 11.5% loan balance as of2016and top 10borrowers accounted for 86.3% of total loans. The marketsare also concerned about their aggressive expansion in interbank business andinvestment, given the surging default rate in bond market recently. Oneexample is for Bank of Hankou, total investment was Rmb81.8bn, accountedfor 39% of total assets including Rmb32.2bn bond investment and Rmb49.6bninvestment to WMP and trust.(DB view) please refer to our report - Searching for systemic risks for reference.In this report, we modeled 17unlisted local banks in Shanxi, Heilongjiang, Jilinand Liaoning, the four provinces which combined are producing nearly nonominal GDP growth.