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Economy

Most commercial lenders' profits used to support real economy

February 20, 2020


Abstract : China's central bank suggested treating commercial lenders' rising profits in a rational fashion, as most of the profits were eventually used to support the real economy, according to a report from the People's Bank of China.

BEIJING, Feb. 20 (Xinhua) -- China's central bank suggested treating commercial lenders' rising profits in a rational fashion, as most of the profits were eventually used to support the real economy, according to a report from the People's Bank of China.

The profit growth of China's commercial banks has generally slowed down in recent years, but it was still relatively high, which has drawn widespread attention.

At the end of September last year, the market value of A-share listed banks accounted for around 16.56 percent of that of all listed companies, and their profits made up 39.01 percent of the total for all listed firms. Commercial lenders reaped net profits of 1.65 trillion yuan (about 235.7 billion U.S. dollars) during the first three quarters of last year, up 9.19 percent year on year.

"Most commercial banks' profits were used to replenish capital, which helped enhance their capabilities to support the real economy and prevent risks," the report said.

About 17 percent of commercial lenders' profits was used for income tax payment, and 23 percent for dividend distribution. The remaining 60 percent was all used to replenish capital, and ultimately to support the real economy through bank loans.

The central bank noted that the business environment still favors state-owned companies, despite the fact that the private sector contributes to the majority of job creation and economic growth in the country.

Commercial lenders should increase lending to small- and micro-sized enterprises and reduce their financing costs. Unleashing their vitality will be a win-win outcome for both the real economy and the financial industry, and will contribute to the long-term sustainable growth of bank profits, the central bank said in the report.

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Keyword: real economy People's Bank of China

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