Dong Wenbiao, chairman of China Minsheng Banking Corp
BEIJING - Private lender China Minsheng Banking Corp has decided to shift its lending focus to small enterprises, and no longer considers large enterprises as the main cash cow, Dong Wenbiao, chairman of the bank said on Thursday."We intend to expand our credit lines to private companies, as unlike the big State-owned enterprises, they are largely underserved," Dong, a member of the Chinese People's Political Consultative Conference, said in an interview with China Daily.
Dong's remarks come at a time when the nation's top policymakers are planning more steps to help private enterprises. Under the stimulus package, most bank lending was targeted at large companies and infrastructure projects backed by the government, while small enterprises continued to languish.
The mid-sized lender last year disbursed 80 billion yuan as new loans to small enterprises. The loans to the small enterprises have had a low defaulting ratio of 0.09 percent till now, dispelling doubts that such loans often carry more risk.
"The real test for us would be this month, when a big chunk of the loans are due for repayment," Dong said. Minsheng's bad loan ratio stood at 0.82 percent as of September 2009.
The chairman said the bank has set a lending target of 100 billion yuan for small enterprises this year. Nearly 100,000 companies are expected to gain from the move, with the credit line for each company to be capped at 5 million yuan.
Minsheng, which raised 30 billion yuan through its long-awaited floats in Hong Kong last year, does not intend to tap the capital market for funds immediately, said Dong. That marks a radical difference from other Chinese lenders who are shoring up capital from the market as they are strained for funds. Dong said lenders should focus more on conserving existing capital rather than rush to raise funds.
The chairman expects Minsheng's lending to expand by 23 percent this year, while deposits may grow at about 30 percent.
The lender is also planning to work with domestic investors to set up a joint financial holding company for the rural financial market.
"If the regulator gives the green light to the plan, the joint venture could be launched this year itself. We also plan to set up 30 to 50 village banks over the next three to five years," Dong said, without elaborating.
"Competition between banks is quite fierce in large cities, while in the rural areas there is a shortage of financial resources. As China's urbanization drive accelerates, the prospects for making profits from rural finance are extremely bright," he said.
Besides Minsheng, the nation's top State-run lenders, including Bank of China and China Construction Bank, are also seeking to work with foreign partners like Temasek and Spanish lender Santander to re-enter the rural financial market.
