On September 29, 2016, Bank of China issued its report for 2016Q4 Economic and Financial Outlook (hereinafter referred to as the “report”). In this report, there is an outlook for the global and China’s economic and financial situation and the world banking industry in Q4, based on the review of 2016Q3.
Global Economic and Financial Outlook: In 2016Q3, global economy recovered, the Brexit did not show severe aftermath yet, and capital reflux promoted economic stabilization of emerging economies. We maintained our expectation of global economy growing at 2.5% throughout 2016. Global financial markets saw strengthened stability, but the risk types have changed. Capital markets were improved in general, vulnerabilities of emerging markets nudged down and commodities markets started to seek re-balancing. According to our expectation, in 2016Q4, global economy will continue to grow sluggishly, sufficient attention should be paid to potential risks of financial markets, uncertainties over political and economic events and the possible interest rate hike by the Fed will cause market turbulences.
China's Economic and Financial Outlook: In 2016Q3, China maintained overall stability of economic development under the influence of cumulative effects of previous policies, a booming real estate market and rebounding energy and raw materials sectors. Recently, as major economic indicators begin to stabilize, economic downward pressure has been mitigated. In 2016Q4, it is expected that exports will continue picking up, investments and emerging industries will be supported by more effective fiscal policies, consumption and service sectors will grow steadily and the economy will maintain stable in the near term. GDP growth for the full year will be about 6.7%, within the target range set by the government at the beginning of the year.
Global Banking Industry Outlook: In 2016H1, the global banks headed in different directions: the U.S. banking industry kept broadly stable operation, the banks of Eurozone and the UK improved slightly, and the banking industry of Japan deteriorated. In 2016Q4, operation of China’s listed banks is projected to remain under pressure. Overall net profit of the Chinese banking industry is estimated to grow by 2.6% year on year, and the NPL ratio is expected to jump further to 1.70%. Maintaining stable asset quality and developing non-interest business are the keys to keeping stable operation.
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