Last year, the banking industry in most regions of the country maintained overall stable asset quality, but specific data generally showed fluctuations. Recently, Securities Times reporters reviewed data from the website of the State Administration of Financial Supervision and found that among the 26 regions (including provinces, autonomous regions, municipalities directly under the central government, and cities specifically designated in the state plan) that have released non-performing loan data for the end of 2024, the non-performing loan ratio in 16 regions has increased compared to the beginning of 2024. The annual reports and performance reports recently disclosed by listed banks also reflect this change. Specifically, the asset quality of several major economic provinces has slightly declined, while previously high-risk areas have gradually returned to a healthy track through continuous disposal and clearance of non-performing assets. For example, the banking industry in Gansu, Hebei, Guangxi and other places has achieved a "double reduction" in non-performing loan ratio and non-performing loan scale; As economically developed regions, Guangdong, Zhejiang, and Jiangsu have seen a slight increase in the total size of non-performing assets due to their high credit base and small fluctuations in non-performing loan ratios. As of the time of writing, the non-performing loan ratios disclosed by China Merchants Bank, Ping An Bank, Bank of Communications, and Chongqing Bank at the end of 2024 were 0.95%, 1.06%, 1.31%, and 1.25%, respectively, which were unchanged, unchanged, decreased by 0.02 percentage points, and decreased by 0.09 percentage points compared to the beginning of last year, all lower than the overall non-performing loan ratio of 1.50% for commercial banks in China at the end of last year. However, from a national perspective, there are still significant differences in the asset quality of the banking industry between different regions. According to Securities Times reporters, among the 26 regions in China that have released data for the end of 2024, 9 regions have a non-performing loan ratio higher than the national commercial bank benchmark. Among them, the non-performing loan ratio of the banking industry in Heilongjiang, Gansu, Jilin, Hainan, and Dalian exceeds 2%. The indicator is less than 1% in five regions including Zhejiang, Jiangsu, Beijing, Xiamen, and Anhui. It is worth mentioning that in the past few years, the number of regions with high non-performing loan ratios has significantly decreased through continuous disposal of non-performing assets. Among them, Hainan, Gansu, and Dalian have experienced significant declines and entered a safe zone. In 2024, multiple regions are still continuously reducing non-performing loan indicators, among which Gansu, Hebei, and Guangxi have achieved a "double reduction". The non-performing loan ratio at the end of last year decreased by 0.62, 0.35, and 0.22 percentage points respectively from the beginning of last year, to 2.56%, 1.66%, and 1.28%. The scale of non-performing loans decreased by about 13 billion yuan, 19.4 billion yuan, and 5.5 billion yuan respectively from the beginning of last year. In addition, the defect rates in seven regions including Tianjin, Hainan, Dalian, and Shandong have also decreased to varying degrees. Gansu is one of the typical regions for preventing and resolving financial risks in recent years. Due to factors such as weak local economic foundation and industrial restructuring, the asset quality of rural credit institutions in Gansu Province varies greatly, and the historical burden is relatively heavy. Data shows that from 2019 to 2021, the non-performing loan ratio of banking and financial institutions in Gansu has been higher than 6% for three consecutive years, but this indicator is far better than the overall level for state-owned large banks, joint-stock banks, and city commercial banks. By the end of 2024, the overall risk indicator has achieved a significant decline. In recent years, the work report of the Gansu Provincial Government has mentioned the resolution of financial risks for several consecutive years. The statement for 2024 is to steadily promote the reform of agricultural cooperative institutions, orderly withdraw high-risk institutions, and strive to clear and dispose of non-performing assets of about 45 billion yuan. It is understood that 2025 is the year when the reform of agricultural credit insurance in Gansu province is launched. According to the work arrangement of the provincial government, Gansu will continue to promote the collection and disposal of non-performing assets and complete the task of reducing high-risk institutions. At the same time, the construction of a provincial-level agricultural and commercial bank with a unified legal entity in Gansu Province is also being promoted. From the perspective of data changes, the non-performing loan ratio of the banking industry in 16 regions including Heilongjiang, Xiamen, and Guangdong has increased to varying degrees compared to early 2024, reflecting a decline in asset quality. Among them, Heilongjiang increased by 0.40 percentage points to 2.60%, with a relatively high growth rate; The increase in the remaining 15 regions is limited, ranging from 0.01 percentage points to 0.20 percentage points. Although overall risk indicators show that the asset quality of the banking industry in most regions remains stable and positive, it is worth noting that the loan asset quality of some economically developed regions' banking industry has declined in 2024. The first category is economically major provinces, including Guangdong, Zhejiang, and Jiangsu, where the non-performing loan ratio and scale showed a "double increase" at the end of last year. Among them, Guangdong increased by 0.17 percentage points to 1.52%, exceeding the national benchmark for non-performing loan ratio of commercial banks. The scale of non-performing loans increased by about 45 billion yuan last year, with a total of 280.6 billion yuan, ranking first in the country. The defect rates in Zhejiang and Jiangsu are still at an extremely low level, only 0.75% and 0.77% respectively, but have increased by 0.13 and 0.07 percentage points respectively; The scale of non-performing loans increased by approximately 34.4 billion yuan and 42.3 billion yuan respectively. The three provinces mentioned above are located in the "Pearl River Delta" and "Yangtze River Delta", and objectively, due to the large base of bank credit allocation, they have driven the increase in non-performing asset scale. The second category includes first tier developed cities such as Beijing, Shanghai, and Shenzhen, as well as some coastal cities such as Xiamen and Qingdao. While the values in these areas remain low, there have also been fluctuations in credit quality. Among them, Beijing, Shanghai, and Shenzhen have increased by 0.02, 0.06, and 0.2 percentage points respectively compared to the beginning of 2024, and the scale of non-performing loans has increased by about 8.1 billion yuan, 15 billion yuan, and 15.3 billion yuan respectively. The total scale of non-performing loans in Shenzhen has reached 154 billion yuan, ranking first among first tier cities. In economically developed coastal cities, the non-performing loan ratios in Xiamen and Qingdao increased by 0.16 and 0.20 percentage points respectively, with a more significant growth rate. This trend is also reflected in the asset quality of several national banks. Recently, the 2024 annual reports released by Bank of Communications, Ping An Bank, and China Merchants Bank showed that credit risk indicators in the Yangtze River Delta, Pearl River Delta, or eastern and southern regions have all increased. The periodic rebound of non-performing loan rates in these economically developed regions is relatively normal because their indicator base is relatively low A banking industry analyst from a securities firm told Securities Times reporters that in recent years, real estate risks have been gradually cleared, which can easily bring fluctuations to lower levels of non-performing loans. Another securities analyst believes that in the retail sector, the main pressure for non-performing loans comes from small businesses and operating loans in the inclusive sector, and it is expected that the retail non-performing loan ratio will continue to show an upward trend. In terms of corporate business, the debt pressure of most private real estate companies has been basically exposed, and the real estate industry is currently in a sustained and stable state of liquidation. In the past three years, the stock risks of small and medium-sized banks have been unresolved. China's banking and financial institutions have disposed of over 3 trillion yuan of non-performing assets annually, maintaining a strong disposal capacity. According to data from the Banking Credit Asset Registration and Circulation Center, the transaction volume of non-performing assets listed for transfer in 2024 reached 225.8 billion yuan, a year-on-year increase of 81%. Overall, the asset quality of various commercial banks in China has improved, but there has also been a rebound in the asset quality of some small and medium-sized financial institutions. As representatives of high-quality banks, A-share listed banks maintain stable asset quality. Recently, 16 listed banks have disclosed asset quality data in their 2024 performance reports, with 10 banks showing a year-on-year decrease in non-performing loan ratios at the end of 2024 and 6 banks remaining unchanged. These listed banks are either national joint-stock banks or mainly small and medium-sized banks in economically developed coastal areas. From the data of financial regulatory authorities, it can be seen that the overall non-performing loan ratio of national banks is still declining. Data shows that by the end of 2024, the non-performing loan ratios of state-owned large banks and joint-stock banks were 1.23% and 1.22%, respectively, a year-on-year decrease of 0.03 and 0.04 percentage points, respectively. The data shows that the risk indicators of local small and medium-sized banks still remain relatively high. Among them, by the end of 2024, the non-performing loan ratio of rural commercial banks in China reached 2.8%, a year-on-year decrease of 0.54 percentage points. Although the decrease was significant compared to the previous year, its value still ranked first among various financial institutions. Next are city commercial banks and private banks, which increased by 0.01 and 0.11 percentage points respectively to 1.76% and 1.66%. Among them, the increase in non-performing loan balance of city commercial banks was second only to state-owned large banks, with an annual increase of 41.7 billion yuan. In the past year, the pace of risk management for local small and medium-sized financial institutions has significantly accelerated, and the reform plans for rural credit systems in many regions have been smoothly implemented. Sichuan, Guangxi and other regions have established provincial-level rural commercial banks with assets of over one trillion yuan, and a new batch of trillion yuan "super rural commercial banks" are on the way. At the same time, the number of rural financial institutions will decrease significantly in 2024, with a decrease of 192 throughout the year, with rural banks experiencing the largest reduction. It can be expected that the risk mitigation efforts of small and medium-sized banks will continue to strengthen in the future. The No. 1 central document issued in February this year requires that rural small and medium-sized banks adhere to the orientation of supporting agriculture and supporting small businesses, accelerate the reform of rural credit cooperatives with "one province, one policy", and steadily and orderly promote the reform and restructuring of rural banks. The government work report in March this year also mentioned the need to "promote the risk management and transformation development of local small and medium-sized financial institutions in accordance with the principles of marketization and rule of law, and comprehensively adopt methods such as supplementing capital, mergers and acquisitions, and market exits to classify and resolve risks. This series of policy measures have pointed out the direction for risk resolution and reform and development of small and medium-sized banks, especially rural small and medium-sized banks, and also indicate that related work will be further promoted in the future. (New Society)