China's 30,000-plus rural credit cooperatives have reported
their first aggregate profit in more than 10 years, the China
Banking Regulatory Commission (CBRC) announced
on Tuesday.
The cooperatives, together with a few newly established rural
commercial banks and cooperative banks, posted combined profits of
10.5 billion yuan (US$1.3 billion) in 2004.
A total of 26,245 such cooperatives -- 81 percent-- are writing
their year-end income statements in black ink.
The State Council, China's cabinet, approved a pilot scheme in
2003 to restructure the unprofitable credit co-ops, which are the
major source of funds in the nation's rural areas.
The CBRC said earlier it would help the cooperatives reduce bad
loans and improve management to enable overseas and domestic
strategic investors to enter the sector, but has yet to report any
specific progress in this regard.
It did say that the cooperatives' strong lending operations
greatly boosted their interest income last year.
New loans totaled 2.4 trillion yuan (US$290.0 billion) last
year, 405.0 billion yuan (US$48.9 billion) more than in 2003,
helping to lift interest income by an annualized 30.8 percent to
112.2 billion yuan (US$13.5 billion).
The cooperatives cut their nonperforming loans by 54.5 billion
yuan (US$6.5 billion) during the year, bringing their aggregate NPL
ratio down by 6.3 percentage points to 23.1 percent at the end of
2004.
"The cooperatives' improved asset quality effectively reduced
their proportion of non-interest-yielding assets, and raised their
returns on assets," the CBRC said in a statement.
Governmental support played a major role in improving the
cooperatives' profitability last year, according to the commission:
in all eight provinces and municipalities where pilot reforms took
place last year, the credit co-ops finished the year in the
black.
The cooperatives in the eight selected regions -- Jilin,
Shandong,
Zhejiang,
Guizhou,
Jiangxi,
Jiangsu
and Shaanxi
provinces and Chongqing
Municipality -- were granted subsidies and tax breaks and were
allowed to swap their bad assets with central bank bills.
They were also allowed to restructure according to regional
conditions, selecting whether to operate as shareholding entities,
cooperatives or a combination of the two.
(China Daily January 19, 2005)