Open Source Securities: Caution and Optimism Towards Bank Retail Assets Risk, New Regulations in Transition but Adjustment Space Still Exists

Open source securities released a research report stating that the risk in the retail sector of state-owned banks is controllable. The limited disposal of non-performing loans through collection methods gives them a higher provision adjustment capability, with better coordination of factors affecting provisions and more certainty in provisioning indicators. They can still maintain a cautious optimism towards the quality of retail assets in state-owned banks. Some commercial banks have a high provision-to-loan ratio for impaired loans, giving them a safety margin advantage. With improvement in retail non-performing loan ratios, there are signs of risk reduction in existing stock. They recommend CITIC Bank (601998.SH) and mention other benefit targets such as Agricultural Bank Of China (601288.SH), China Construction Bank Corporation (601939.SH), China Merchants Bank (600036.SH), Bank Of Hangzhou (600926.SH), and Chongqing Rural Commercial Bank (601077.SH). The main points from the open-source securities report are as follows: - The determination of non-performing loans by listed banks has not decreased, and the transition period for new risk regulations is approaching, which may be manageable. - While the non-performing loan ratio of listed banks remains stable, there is a rebound in overdue indicators for state-owned banks, with some rural commercial banks showing increased attention rates, mainly due to the rising risks in the micro and retail business sectors. - The recovery of risks in corporate operations continues, and a cautious optimism can still be maintained towards the quality of retail assets in state-owned banks. - The provision-to-loan ratio for impaired loans has significantly increased, and the four major banks have more certainty in their provisioning indicators. Risks include uncertainty in overseas economic conditions.