Bank loans and associated credit risks in China have been closely monitored by banking regulators and investors. In March 2013, GrassrootsSM
Research interviewed 48 bank branch managers in China for their views on loan pricing, asset quality and the outlook for loan growth.
Highest Loan-Growth Industries in China
Number of sources (n=48) citing expectations for
loan growth in first half of 2013
Source: GrassrootsSM Research report as at March 2013
The findings: Small and medium enterprises (SME) and micro and small enterprises (MSE) loans were expected to grow faster than large corporate loans, mortgages and other consumer loans in the first half of 2013. Bank manager sources expect property developers, manufacturing companies and local government financing vehicles (LGFV) to experience the highest loan growth.
As one source explained, "Small to midsize property developers are still very active… They need large amounts of cash at first. We would love to do business with them, as they can provide high-quality collateral."
Sources reported loan pricing was generally unchanged vs. the second half 2012, and they expect asset quality to improve given more stringent loan application evaluations and higher standards for collateral.