China’s high margin lending markets fading
(4 May 2010 – China) The Chairman of China’s Banking Regulatory Commission, Liu Mingkang, has warned the country’s banks that the days of three to five percent net interest margins have gone.
Coupled with this warning has been a call for commercial banks in China to expand the range of products being offered to the market there as a way of diversifying their revenue streams as well as focussing more effort away from large borrowers and projects. With net interest margins reducing and the cost of attracting deposits rising, the Regulator sees margins more in the region of two percent in future.
The comments are notable, given that the Peoples’ Bank of China artificially places a ceiling on deposit rates and insists on a floor on lending rates, thus partly delivering to lenders in the China market a minimum margin on their lending business.
The comments are notable, given that the Peoples’ Bank of China artificially places a ceiling on deposit rates and insists on a floor on lending rates, thus partly delivering to lenders in the China market a minimum margin on their lending business.
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