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Hong Qi, Executive Vice President of CMBC: Credit & Loan in 2009 Tends to Have Rational Growth

2009-3-3

 

Hong Qi said that CMBC will consider making the industry with clear revitalization plan as the direction for its credit & loan development.

 “I believe the development (of the banking credit) for the whole year shall be rational. The decision making managers of all banks will consider the risks”, Hong Qi said, when asked about the record high1.62 trillion RMB new loan of China’s banking industry in January.

As CMBC, he used the phrase “moderate growth”. The credit growth of 2008 will be almost the same with 2007 and 2006. “Some budgets have not been approved (by the Board), it is hard to say”, ”credit growth may be faster (than 2007 and 2006)”.

The credit growth rate of CMBC in 2007 is 18%, and that for 2008 has not be

Hong Qi said that some counterparts may “move faster”. “We are holding business meetings of CMBC to promote”, “and maintain growth”, so everyone in the company shall give full support.

The business meeting he mentioned refers to the 2009 CMBC Business Promoting Meeting held in Shanghai, attended by all business-related departments of CMBC throughout China.

On the same day, CMBC Shanghai signed Credit Contracts with Shanghai Chengtou Corporation, China Eastern Airlines, Shanghai Lingang, Expoland, with a total amount of over 40 billion RMB, among which Shanghai Chengtou got 1.8 billion RMB credits and China Eastern got 10 billion RMB credits.

“This is our first step, and maybe the largest step”, he said. According to Hong Qi, CMBC will explore similar opportunities in other cities to support regional economic development in the near future.

When asked when CMBC will use the credits, Lin Yunshan, director of Banking Management Commission Office of CMBC said “we certainly want to use that  money as soon as possible”. 
In terms of credit investment direction, Hong Qi said that CMBC had no specifi plan by then. But he also said that it will consider the ten industries mentioned in the revitalization plan.
When talking about the investment of CMBC to UCBH Holdings Inc. (UCBH), Hong said although there is the financial crisis, “we will continue to work with UCBH”. When asked about when to stake increase, he said “it depends”.

“It is the problem of the system, so no one could get rid of it”, he said, “UCBH has nothing to do with the sub-prime problem.” He explains that since UCBH serves mainly overseas Chinese, who are normally prudent and moderate, and rarely buy sub-prime debts.

According to the latest Notice of UCBH, its net interest income in 2008 before provision reached to USD 336.1 million, 4.18% higher than 2007; and the total deposit for 2008 is USD 897 million, 15.24% higher than the end of 2007 which is USD 778 million. 

In December 2008, CMBC announced that it completed its 2nd investment to UCBH, and its shares in UCBH has increased from 4.9% to 9.9%, which was regarded as a successful bottom-fishing by CMBC. It planned in 2007 to invest for the second phase USD115 million-USD172million, yet due to dropping of UCBH share price, it only used 29.899 million RMB, 15%-23% of the previously planned amount. According to the previous agreement, CMBC could increase its shares by 20%.

 

 

 

 

 

 

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