Analysis Of J Bank’s Non-performing Asset Disposal Options

With the transformation of economic development,the downward pressure on China’s economy has increased.Since 2015,China’s economic development has entered a new normal,and the economic structure has been continuously adjusted.The performance growth rate of China’s commercial banks has declined significantly,and the banks’ non-performing asset balances have also increased.According to statistics from the China Banking Regulatory Commission,from 2015 to 2018,China’s banks The industry’s loan credit scale increased by 11.2%,while the NPL index increased by 42.9%.Against the background of the rapid increase in NPL ratios,commercial banks urgently need to find a way to quickly and efficiently "reduce" NPL indicators,whether it is loan restructuring,package transfer,or litigation collection,they are unable to meet The demand for commercial banks to dispose of bad loans quickly and in large quantities.At the same time,in 2017,the Ministry of Finance promulgated a new version of the "Administrative Measures for the Debt Write-off of Financial Enterprises".Compared with the old method,the most prominent feature of this new method is the relaxation of the conditions for write-off of non-performing loans.Then,what impact will the introduction of this new method of the Ministry of Finance have on the disposal of non-performing loans of commercial banks?This article uses J Bank as an example to explore this effect.In the analysis of Bank J’s disposal of non-performing loans,restructuring and write-offs were taken as representatives of on-and off-balance sheet disposal methods.The comparison found that between 2015 and 2018,the total non-performing loans of Bank J increased year by year,but Bank J gradually reduced the scale of reorganization and at the same time rapidly increased the scale of write-offs,especially in the new version of the 2017 "Administrative Measures for Write-Offs".After 2018,the total write-off of Bank J’s non-performing loans was as high as 50 billion yuan,five times the total amount of restructured loans.So,why did Bank J choose to use write-off to deal with such a huge amount of non-performing loans? The author focused on the analysis of the mechanism of write-offs on banks ’non-performing loans and profit indicators.The study found that the non-performing loans were allocated before the write-off was maintained.Under the condition that the coverage ratio remains unchanged,write-off of non-performing loans can release some provisions for banks and increase bank profits;while maintaining the pre-write-off loan provision rate unchanged,the write-off of non-performing loans requires an increase in bank loan provisions To reduce bank profits.Therefore,although write-off is a means of disposing of non-performing assets,it can regulate bank profits and non-performing indicators and meet the purpose of commercial banks to quickly and efficiently "reduce" non-performing loan indicators.This is the reason why Bank J used a large amount of write-offs to dispose of non-performing assets,and it is also a direct manifestation of the impact of the new version of the “ Administrative Measures for the Debt Write-off of Financial Enterprises” issued by the Ministry of Finance.Therefore,this article points out the mechanism of write-off impact on profits,and through hypothesis analysis,discusses the profit and indicators of Bank J after write-off and write-back,and maintains the pre-write-off NPL ratio and provision coverage ratio for banks The impact of profits.And pointed out that write-off is an important means of J Bank to adjust profits and bad indicators.In 2017,the Ministry of Finance promulgated the "Administrative Measures for the Debt Write-off of Financial Enterprises",which actually opened the door for commercial banks.In the context of the large-scale outbreak of non-performing loans,it provided commercial banks with a fast "pressure-down" The path,in turn,affects profits through the provision of provisions,so that commercial banks have more autonomy in the adjustment of profits and indicators.In fact,with the continuous relaxation of write-off conditions,write-off is no longer a means of disposing of bad loans,but a means of adjustment.In fact,the write-off of non-performing loans is an important means for banks to “ destate ” non-performing loans.Commercial banks have written off some “non-performing loans” from their balance sheets and do not reflect them on the banks ’books.But in fact,the write-off of non-performing loans cannot achieve the real recovery of non-performing loans.The non-performing assets after write-off are still a "tumor" of the bank’s financial assets,eroding the operating profit of the bank and increasing the operating risk of the bank.In the final recommendations and conclusions,this article gives recommendations on the write-off of non-performing loans and the current status of non-performing loans of Bank J.Bank J should focus on the resolution of non-performing loans,diversify the disposal methods,combine various non-performing loan disposal methods,and attach importance to Substantial clearance.