Image source: Visual China
Reporter | Zeng Lingjun
China Chengxin International recently released a follow-up rating report on Sichuan Tianfu Bank. The report shows that the bank’s credit rating outlook has been adjusted from stable to negative. This indicates that the credit level of Tianfu Bank may decline in the next 12 to 18 months.
It is understood that this is the first city commercial bank whose rating outlook has been adjusted to negative this year. “The downgrading of the rating may affect the interest rate of the bank’s bond issuance. The lower the rating, the higher the interest rate of the bond issuance, which will increase the cost and difficulty of financing.” A banker commented to an interface news reporter.
Zhou Maohua, an analyst at the Financial Markets Department of Everbright Bank, told Jiemian News that company ratings are one of the important basis for investors to price companies and related assets. There are many factors that trigger downgrades of companies or institutions, such as macroeconomics, policy changes, and emergencies. , The company’s internal management issues, etc., caused changes in the company’s fundamentals, business prospects, and asset quality.
Regarding the reasons for the rating downgrade, China Chengxin International mentioned that Tianfu Bank faces many challenges, including the slowdown in macroeconomic growth and the pressure on bank operations and asset quality caused by changes in the regional credit environment, as well as continuous credit assets and non-standard investment risks. Exposure and profitability have been significantly weakened, deposit stability has become weaker, and liquidity management pressure has increased.
Last year, Tianfu Bank’s revenue and net profit both declined significantly: net operating income was 4.324 billion yuan, a year-on-year decrease of 9.46%; net profit was 846 million yuan, a sharp drop of 42.11% year-on-year.
China Chengxin International also mentioned that the bank’s loan and non-standard investment risks continue to be exposed, and the resolution is increasing, and future credit risk management and control will still face pressure.
As of the end of 2020, the bank has no non-performing balances in non-standard investments, but special mention loans are 6.213 billion yuan, accounting for 23.97%. The financiers are mainly real estate and trading companies in Sichuan and Guizhou. “On the whole, the bank’s securities investment accounts for a relatively large proportion of non-standardized debt investments, and they have already experienced significant impairment. The information transparency of such investments is low, and they face greater pressure to withdraw impairment reserves, and related risks need to be maintained. Pay close attention.” The report mentioned.
As of the end of 2020, the bank’s non-performing loan balance increased by 341 million yuan to 2.612 billion yuan year-on-year, and the non-performing loan ratio increased by 0.02 percentage points from the beginning of the year to 2.00%.
In addition, the rating report also hints at the liquidity pressure of Tianfu Bank. As of the end of 2020, Tianfu Bank’s assets due within one year accounted for 39.58% of total assets, and liabilities due within one year accounted for 60.86% of total liabilities. The maturity gap within 2-7 days at the end of the year was -6.27 billion yuan. Facing greater pressure on liquidity management.
According to the official website of Tianfu Bank, the bank was established in 2001 and successfully introduced German strategic investors in 2005, becoming China’s first secondary city to introduce foreign capital. Its current asset scale is 216.181 billion yuan.
The bank’s equity is relatively dispersed. As of the end of last year, the top five shareholders of the bank’s shareholding ratios were: Sichuan Mingyu Group Co., Ltd. (9.98%), Nanchong Union Industrial Co., Ltd. (9.98%), and Chengdu Yunji Real Estate Development Co., Ltd. Liability company (9.93%), Chengdu Fengzhilin Trading Co., Ltd. (9.89%), Nanchong Jinnan Industrial Co., Ltd. (4.99%)
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