You mentioned about Chinese banking at risk. I've read elsewhere NIMs are collapsing for Chinese banks.
How do you think it will play out? We all know China's growing debt pile and economic imbalances are unsustainable. But how will it play out and what likely is to trigger alarm? Shouldn't it fall under its own weight?
That is true, falling NIMs aligns directly with falling profitability as the charts show this week.
I think the answer is that there never was a requirement for state banks to be profitable, as they serve other purposes for the state. They are the vehicle in which capital is allocated into the economy, with very little immediate cost to those decisions.
China has restructured and recapitalised its banking system before...and it will be required to again in the future. Bad debt would have to be widespread if this were to occur, as if it is limited to a few companies or just one sector it might be easier to target the borrowers themselves rather than dealing with it on the bank level.
Amazing graphs on China...Kudos!
You mentioned about Chinese banking at risk. I've read elsewhere NIMs are collapsing for Chinese banks.
How do you think it will play out? We all know China's growing debt pile and economic imbalances are unsustainable. But how will it play out and what likely is to trigger alarm? Shouldn't it fall under its own weight?
That is true, falling NIMs aligns directly with falling profitability as the charts show this week.
I think the answer is that there never was a requirement for state banks to be profitable, as they serve other purposes for the state. They are the vehicle in which capital is allocated into the economy, with very little immediate cost to those decisions.
China has restructured and recapitalised its banking system before...and it will be required to again in the future. Bad debt would have to be widespread if this were to occur, as if it is limited to a few companies or just one sector it might be easier to target the borrowers themselves rather than dealing with it on the bank level.