How does the People’s Bank of China view the credit risks faced by real estate companies? Are you worried about systemic risks? In response to this, Zou Lan, Director of the Financial Market Department of the Central Bank, responded at the third quarter financial data statistics press conference on October 15th, saying that of the total liabilities of Evergrande Group, financial liabilities are less than one-third. Creditors are also relatively dispersed, and individual financial institutions have little risk exposure. On the whole, the risk of its spillover to the financial industry is controllable.
At present, relevant departments and local governments are carrying out risk disposal and resolution work in accordance with the rule of law and marketization principles, and urge Evergrande Group to increase its asset disposal efforts. Speed up the restoration of project construction and safeguard the legitimate rights and interests of housing consumers. In this process, the financial department will cooperate with the housing and urban-rural construction department and local governments to provide financial support for the resumption of the project.
“Hengda Group’s total assets exceed 2 trillion yuan, of which real estate development projects account for about 60%, involving more than 1,000 project subsidiaries as independent legal entities. In recent years, this company has been poorly managed and failed to operate cautiously in accordance with changes in the market situation. Instead, it has blindly diversified and expanded, causing serious deterioration in its operating and financial indicators, and ultimately risking outbreaks.” Zou Lan said.
He also said that the problems of Evergrande Group are an individual phenomenon in the real estate industry. After the macro-control of real estate in recent years, especially after the establishment of a long-term real estate mechanism, the domestic real estate market’s land prices, housing prices, and expectations have remained stable. Most real estate companies have been operating steadily and have good financial indicators. The real estate industry is generally healthy.
Talking about the centralized management system for real estate loans that has entered the normalized implementation stage, Zou Lan said that in the first three quarters of this year, personal housing The amount of residential sales basically matched. Among them, housing prices in a few cities have risen too fast, personal housing loans are subject to some constraints, and the rate of housing price increases has been suppressed. After housing prices stabilize, the supply-demand relationship of housing loans in these cities will also return to normal.
“Recently, individual large-scale real estate companies have been exposed to risks, and financial institutions’ risk appetite for the real estate industry has dropped significantly, with consistent shrinking behavior, and real estate development loan growth Significant decline. This short-term overreaction is a normal market phenomenon. After Baoshang Bank went out of business in 2019 and Yongmei and Brilliance defaulted on debt last year, similar phenomena also occurred in the interbank market and the credit bond market.”
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