The impact of non-performing loans on commercial banks

1. The impact of non-performing loans on commercial banks

The formation of non-performing loans in commercial banks has long restricted the normal operations of commercial banks. Therefore, reducing non-performing loans has become the current top priority for commercial banks. Let me share with you the relevant content about the impact of non-performing loans on commercial banks. I hope it will be helpful to everyone.

What impact do non-performing loans have on commercial banks? The formation of non-performing loans in commercial banks has long restricted the normal operations of commercial banks. Therefore, reducing non-performing loans has become the current top priority for commercial banks. This article provides a relatively comprehensive explanation of the causes of the formation of non-performing assets in commercial banks and explains the main measures to control the growth of non-performing loans.

Reasons for the formation of non-performing loans

Non-performing loans have been formed in my country's commercial banks for a long time, so the reasons for the formation of non-performing loans in my country's commercial banks are relatively complicated. The reasons for the formation of non-performing assets in commercial banks are very complex. The main reasons can be roughly expressed in the following four aspects: first, most enterprises have not established modern enterprise systems and are poorly managed; second, local governments are eager to pursue political achievements and constantly require Banks provide loans for new projects and key projects and intervene in bank operations; third, the legal system is not sound enough, resulting in a large number of non-performing assets in commercial banks and the weak legal awareness of commercial banks themselves; fourth, bank credit management problems The mechanism is not perfect, and modern bank staff have a low sense of responsibility and low quality.

Analysis of the causes of non-performing loans of state-owned commercial banks

Non-performing loans of state-owned commercial banks in my country have been formed for a long time. Therefore, the causes of non-performing loans of my country’s commercial banks are relatively complicated. The main ones are Historical reasons and the impact of my country’s economic system reform factors. Of course, defects in commercial banks' own operating and management mechanisms are also indispensable factors in the formation of non-performing loans.

Find solutions from the causes of non-performing loans

From the analysis of the previous two points, it can be seen that the main reason for the formation of non-performing assets of state-owned commercial banks is that state-owned banks are planning to The historical period of the economy carries a special mission, and it has been hit to a certain extent during the transformation of our country's system. With the continuous deepening of my country's active institutional reform and the increasingly perfect market economy, the role of state-owned commercial banks has changed, and the historical missions of state-owned commercial banks have also largely ceased to exist.

The government has introduced a series of policies in recent years in the hope of reducing the non-performing loan ratio of state-owned commercial banks: debt-for-equity swap of 1.4 trillion yuan of non-performing loans; capital injection of 270 billion yuan from the national finance; establishment of The China Banking Regulatory Commission has issued hard targets for reducing non-performing loans to the four major state-owned commercial banks, such as reducing the non-performing loan ratio by 3-4% within 2 years and reducing the balance of non-performing assets by 70-80 billion yuan; closing insolvent financial institutions; and comprehensively implementing the five-level classification of loans. and a series of measures. It can be said that the state has spared no effort in changing the external environment of state-owned banks and reducing the non-performing assets of state-owned commercial banks, which fundamentally provides conditions for state-owned commercial banks to reduce the non-performing asset ratio.

However, what is incompatible with changes in the market economy environment and changes in national policies is that the internal systems of state-owned commercial banks, especially the credit systems closely related to the formation of non-performing loans, are not perfect, resulting in The phenomenon of non-performing loans being divested and new ones being added at the same time. Let’s look at the characteristics of ICBC’s non-performing loans and credit system.

Disposal of non-performing loans

2. What harm does the non-performing loan ratio do to commercial banks?

The impact of non-performing loans:

Banks are enterprises with strong capital liquidity. Non-performing loans will increase the bank's debt burden, increase the bank's ability to absorb deposits, and cause financial problems.

High non-performing loan ratio and support capability. Chinese banks have been extremely cautious about lending in recent years because there are too many non-performing loans, which has affected the bank's ability to lend.

To solve the problem of non-performing loans.

If we take it lightly, the large number of non-performing loans will also induce social moral hazard and may cause chain bankruptcies of enterprises, increasing financial risks and social crises.

3. Hello everyone. Can anyone help me explain the significance or benefits of solving the non-performing loans of rural credit cooperatives?

First, let me tell you the harm of non-performing loans

1. The greatest harm caused by a high non-performing loan rate is that it affects the bank's ability to support the economy. The development of local economy at the county level is inseparable from credit cooperatives. The economic pillar of supporting "agriculture, rural areas and farmers" is to increase loans to agriculture, rural areas and farmers.

2. The large number of non-performing loans will also induce social moral hazard. You don’t need me to explain this to you, right?

What does it mean? Just look at it from the opposite side

1. Improve credibility

2. Can better support the local economy

3 .Better support the development of small and medium-sized enterprises