The banking regulator has released a slew of record-breaking figures including total assets, profits and improvements in loan quality that Shanghai banks generated last year.

The sterling performance of Shanghai's banking sector, reported exactly one year after the full opening of China's banking sector, is attributed by analysts to Shanghai's economic boom and financial institutions' efforts to diversify their businesses.

According to the Shanghai office of the China Banking Regulatory Commission, the total assets of domestic and overseas banks in the city surged 31.1 percent year-on-year to 4.76 trillion yuan at the end of last year.

State banks took the largest market share, about 42.7 percent, with combined assets of 2.03 trillion yuan, up 26 percent. Joint-stock commercial lenders saw a growth of 42.1 percent in assets last year, accounting for 24.4 percent market share.

Foreign banks reported the rapidest growth of assets, which surged 48.5 percent to 756.7 billion yuan, or a market share of 15.9 percent.

Deposits and lendings also generated new highs in 2007. The outstanding value of deposits in Shanghai's financial institutions topped 3.03 trillion yuan at the end of last year, up 14.6 percent. The outstanding value of loans stood at 2.2 trillion yuan, increasing 16.7 percent.

Commercial banks in Shanghai generated a combined operating profit of 64.6 billion yuan, a jump of 39.1 percent, the highest ever in history. An important share of the profit came from fee-based income, which ballooned 58.4 percent to 14.2 billion yuan.

"In a broader sense, the financial institutions in Shanghai reported rapid growth in total assets, made steady progress in lending business, and had further improvements in quality, beneficial results and risk control ability," the banking watchdog said in a statement.

"The sector has an optimistic outlook and made historical strides in total assets, loan quality and profit generating capabilities."

Li Hong, an analyst with Shanghai University of Finance and Economics, attributed the stunning growth to the rapid expansion of the nation's economy and banks' efforts to improve their performance.

The economy has been on a strong upward trend for a decade. Growth is expected to exceed 11 percent for 2007.

"The rapid development of Shanghai's commerce and economy boosted the income of banks in the city. Financial institutions are also working hard to diversify their business," Li said.

The watchdog's statistics also show an obvious improvement in loan quality at the city's banks. Domestic lenders in Shanghai reported a total bad loan ratio of 2.56 percent, 0.3 percentage of a point lower compared with the beginning of 2007.

(China Daily January 18, 2008)