[ET Net News Agency, 17 September 2018] HSBC Global Research noted three key sector
changes revealed in the PBoC's 3Q banker survey: (1) confidence on macro has weakened
noticeably. While a declining trend was partly expected due to a high base, the magnitude
of decline was sharp, being the largest q-o-q drop since 2Q 2014; (2) monetary policy was
seen as being eased significantly; (3) loan approval willingness looked higher.
The research house said sector data thus far suggest the magnitude of loan approval
willingness increased only modestly. HSBC expects sector loan growth to pick up moderately
from August 2018 growth of 12.8% y-y to 13-14% by end-2018; sector asset growth would
moderate accelerate from 9% in August 2018 to 10-11% by end-2018.
Given banks' mid-teens ROEs and a 30% dividend payout, the sector is still growing at a
sustainable pace without creating future capital shortage; sporadic issuance of preference
share or subordinated bond will likely be able to address capital needs; capital concern
would, therefore, be less that in 2011-16. (KL)