Guotai Haitong: State-owned banks increase lending efforts, consumer loan non-performing pressure may stabilize.

Guotai Haitong released a research report stating that since 2024, the growth rate of consumer loans has slowed down. Chinese major banks have actively responded to the policy orientation of promoting consumption by significantly increasing the issuance of consumer loans. In addition, consumer finance companies continue to maintain rapid growth in scale. Currently, the credit consumption loan interest rates of banks have generally risen to above the 3% regulatory threshold, while due to the impact of new P2P lending regulations, the interest rate threshold for online lending is restricted to below 24%. Looking ahead, the non-performing loan ratio of consumer loans may face upward pressure in the short term, but is expected to gradually stabilize in the medium to long term as the economy improves, regulatory policies become effective, and banks' risk control capabilities improve. The main points of Guotai Haitong are as follows: Quantity: The growth rate of consumer loans has slowed down, and major state-owned banks have increased their lending efforts. As of the end of 25Q3, the balance of consumer loans excluding personal housing loans was 21.29 trillion yuan (including credit cards), a year-on-year increase of 4.2%, with a slower growth rate compared to before. Since 2020, there has been a trend of increasing loan terms for consumer loans, with the proportion of long-term loans at the end of 25Q3 increasing by 12.1 percentage points to 53.9% compared to the end of 2020. 1) Bank consumer loans account for approximately 27% (about 5.80 trillion yuan at the end of 25Q2), with listed state-owned banks, joint-stock banks, and city commercial banks' consumer loans totaling 2.7 trillion yuan, 1.8 trillion yuan, and 1.2 trillion yuan respectively (accounting for 2.6%, 5.1%, and 9.7% of all loans in state-owned banks, joint-stock banks, and city commercial banks), with year-on-year growth of 26.0%, 2.4%, and 12.1% respectively. 2) There are a total of 31 licensed consumer finance companies, accounting for about 7% of the market. By the end of 2024, the total assets of consumer finance companies reached 1.38 trillion yuan, a year-on-year increase of 14.6%. Based on data from 18 consumer finance companies (with a total asset size of 1.2 trillion yuan), the asset size of these companies increased by 14.6% year-on-year at the end of 25Q2, maintaining a rapid growth rate. The rest are credit cards (accounting for about 41%) and automobile finance companies, small loan companies, internet consumer finance platforms, etc. (together accounting for about 25%). Price: Setting a floor interest rate of 3%, gradual pressure on lowering online lending rates 1) Credit consumer loans: Since 2023, a price war for consumer loans has intensified, with interest rates for individual bank products as low as 2.4%. According to Securities Times, starting from April 2025, the annualized interest rates of credit consumer loan products may be raised to no less than 3%. 2) Consumer finance companies: The average loan interest rate for customers has shown a downward trend, with the overall average loan interest rate for customers of Zhaolian Consumer Finance decreasing from 19.3% in 2019 to 14.8% in 2024. Previously, the high-interest rate Ma Shang Consumer Finance has also decreased from 27.2% in 2020 to 22.1% in 2024. Note: "Notice on Strengthening the Management of Commercial Bank Internet Assisted Loan Business to Improve Financial Service Quality and Efficiency" states that starting from October 2025, the comprehensive financing cost "implicit red line" should not exceed 24%. Quality: The non-performing loan ratio of sample bank consumer loans is 1.56%, with stable pressure on non-performing loans 1) Data from 12 sample banks (including 5 state-owned banks, 4 joint-stock banks, and 3 city commercial banks) show a continuous increase in the non-performing loan rate of consumer loans since the end of 2023. As of the end of 25Q2, the non-performing loan ratio of consumer loans was 1.56% (after write-offs), an increase of 5 basis points compared to 24Q4, with an increase of 25% in the balance of non-performing consumer loans year-on-year. 2) Combining data from assisted lending platforms, Qifukeji's proportion of overdue loans exceeding 90 days was 2.09% at the end of 25Q3, an increase of 12 basis points from the previous quarter. Looking at longer cycles, the previous peak points occurred in 20Q2, 22Q2, and 24Q2, corresponding to proportions of overdue loans exceeding 90 days of 2.82%, 2.62%, and 3.40%, respectively. The current proportion of overdue loans exceeding 90 days is still relatively high, but the marginal growth trend has slowed down, and other major assisted lending platforms such as Lexin and Xin Ye also show the same trend. Risk warning: Insufficient demand for consumer loans; slower-than-expected growth in household income; intensifying internal competition within banks.