① At this stage, it is unrealistic to rely on incentives from housing enterprises themselves and financial policies alone. Local governments have taken land revenue and real estate revenue, and they also have a great responsibility to fight fires and resolve them in an integrated manner. ② The investment intensity of high-credit housing enterprises rebounded in the second half of the year. The investment intensity of Chinese credit housing enterprises increased slightly, but they are still in a low range, and low-credit housing enterprises have basically left the land market.
Financial News Agency, November 21 (Reporter Liang Kezhi) Recently, three departments of the Central Bank, the Securities Regulatory Commission, and the General Administration of Financial Supervision held a symposium on financial institutions, pointing out that financial institutions should thoroughly implement the arrangements of the Central Financial Work Conference, speed up supply-side reforms in real estate finance, and promote the construction of a new model for real estate development.
Since then, according to some media reports, financial regulators are drafting a white list of 50 state-owned enterprises and private real estate agents. The listed companies will receive support from various fields, including credit, debt, and equity financing.
On November 21, a senior member of the major account department of the head office of a stock bank told the Financial Association that no relevant list has yet been seen. However, the source believes that the starting point of the current “bailout” measures for real estate companies is more about preventing systemic risks, which is part of the central government's work on maintaining financial stability.
In fact, the financial situation in the domestic real estate industry is not optimistic. Statistics on the basic situation of the real estate market released by the National Bureau of Statistics show that in January-October, the country invested 9.59 trillion yuan in real estate development, a year-on-year decrease of 9.3%, the sales area of commercial housing was 99.79 million square meters, a decrease of 7.8% over the previous year, and commercial housing sales were 9.72 trillion yuan, a decrease of 4.9%.
On November 21, the business manager of a large urban commercial bank company in East China told the Financial Association that it has not yet received relevant documents and information. It is estimated that the main players this time should be large state-owned banks, and that local small and medium-sized banks are currently doing a good job in their own specialized management.
The source admits that at this stage, it is unrealistic to rely on the incentives of housing enterprises themselves and financial policies alone. Local governments have taken land revenue and real estate revenue, and they also have a great responsibility to fight fires and resolve them in an integrated manner.
Industry insiders: the starting point is more about preventing financial risks
According to the latest report by Wanlian Securities, commercial housing sales in the country's top 30 medium-sized cities all declined month-on-month. From November 6 to November 12, commercial housing in 30 large and medium-sized cities sold 183.34 square meters during the week, down 29.08% from the previous month and 21.67% from the previous year.
If we look at the beginning of the year to date, the cumulative sales area of commercial housing has declined by 6.97%, with the first line up 0.39%, the second tier down 9.25%, and the third tier down 8.72%.
Difficulties in selling new homes have also led to a decline in filming and delays in the delivery of new homes.
According to the November 20 report of Capital Securities, from January to October 2023, the top 100 housing enterprises added 2572.4 billion yuan in land value, cumulatively -15.5% year-on-year; the amount of land added was 1231.4 billion yuan, cumulatively -13.9% year-on-year.
However, there was a clear divergence among housing enterprises. The investment intensity of high-credit housing enterprises ushered in a recovery in the second half of the year. The investment intensity of Chinese credit housing enterprises increased slightly, but they are still in a low range, and low-credit housing enterprises have basically left the land market.
Regarding the rumor about 50 housing enterprises, the aforementioned stock broker also believes that the starting point for the current “bailout” measures for real estate companies is more about considering preventing financial risks, protecting more leading housing enterprises and key housing enterprises, and preventing a wide range of systemic risks from occurring.
On November 19, Open Source Securities analyst Liu Chengxiang released a report stating that the three-departmental symposium was very firm in its policy orientation for real estate risk mitigation and high-quality development. It took into account the quantitative insurance and incremental restructuring of real estate, re-proposed “increasing financial support for insurance buildings,” and promoted mergers, acquisitions and restructuring in the industry.
Next, it is expected that the banking system will consider credit investment in the next two months of 2023 and the beginning of 2024 in an integrated manner to promote steady economic growth through the stability of credit growth. In the future, credit resources may be more inclined towards affordable housing, rental housing, etc.
Bank interest spreads are under pressure, and I'm afraid there's not enough spare time
Housing companies' financing difficulties, sales difficulties, and land photography difficulties are all intertwined.
The reality is that even though purchase restrictions and sales restrictions have been lifted and financial incentives for home purchases have been raised one after another in various regions, the primary market situation is still weak.
Sales directly affect the capital flow of housing enterprises. According to the latest report by Capital Securities, the cumulative growth rate of capital available in real estate in the first 10 months was -13.8%, and the monthly growth rate in October was -17%; in terms of housing enterprise financing, the cumulative year-on-year rate of domestic loans in the first 10 months was -11%, and the monthly growth rate of domestic loans in October was -9.6%, up -13.1 percentage points from the single month in September.
The bank also “cried out” in response to this. The urban commercial banker mentioned above said that for real estate companies, in fact, banks have always been “rescuing and saving themselves,” using the latest real estate policies to actively resolve project risks, but mitigating liquidity risks ultimately depends on the recovery of the market and sales side.
According to the main regulatory data for the third quarter released by the State Financial Supervisory Administration, the net profit of commercial banks for the first three quarters increased 1.6% year on year, down 1 percentage point from the end of June; the net interest spread was 1.73%, falling to an all-time low; and the cost-income ratio was 31.59%, up 1.55 pct year on year.
On the one hand, revenue and profit are slowing; on the other hand, sufficient capital and write-off require real money. In terms of asset quality, although the overall non-performing ratio of commercial banks fell by 1BP to 1.61% month-on-month, considering the banking system's asset size of 100 trillion dollars, the absolute amount of non-performing loans was not small.