Obviously, a lot to talk about. First, let's talk about that.
That number that you just presented here, that the exposure of the property
sector on some of these banks. We've asked us before.
But is this a manageable sort of sort of risk for the lenders now?
Sure. Yeah.
Hi. Thank you for inviting me.
You know, we estimated the banking sector has a total about around 88
trillion army exposure to the property sector.
So as you measure, our loss estimates would be around more than 200 eating
U.S. dollar or one point five trillion.
Indeed, it is manageable because the banking system has a lot of cushion to
this, for the banking system makes about seven point four trillion of revenue a
year and two point four trillion after tax profit.
They also have about 6 trillion of NPL reserves on their balance sheet and 20
trillion of Q and capital quarter and capital.
So I think it's manageable at this point, but still it's going to keep the
banks earnings. OK.
May. How much?
How much does China. I'm not sure if you have an estimate for
this, how much does China need or the system need to complete all these
apartments or unfinished projects? And how much of that do you think will
eventually fall on the banking system to provide that financing?
Yeah, we actually did an estimate on that.
So we expect to roughly about 660 billion R and B will be there to
complete these us start and finish the projects.
So we have seen the Polish banks, the two policy banks trying to get
embankment and agriculture, the bank providing about 200 billion.
So the other gap of about 460 there would be coming from either another
policy bank or a commercial bank. So some of these projects are not total
losses. So we think there's probably be around
20 percent or so. You'll have some value so that the banks
may try to use those projects first and then eventually they're, you know, the
larger actually banks or the Polish banks, there will probably need to have
some losses at UBS, but they need to do this
to ensure that completion of the project.
May. Okay, fine.
All well and good, but is this just kicking the can down the road, a long
road, because China's facing this huge demographic time bomb.
No population is declining as fast as this one.
And also, it doesn't know if some people are estimated 50 million empty homes.
This is going to hurt in the long term. It did.
Chickens, rather, come to roost in a few years, surely.
Certainly demographic changes will have significant impact on the housing
market. Show where?
That's why I think the government two years ago started to know pushing
the deleveraging of the property sector. And then also, you know, we're seeing a
dramatic decline in property sales now, partly because of that, but also deep
averaging. That's why the developers say to you.
So, you know, I think, you know, we're having a more dramatic adjustment than
what the garden and property have expected.
That's why all these that's the actual problem.
And offer something at developers to man up the sixteen point plan that we
got just a week ago. It is really time these lenders to to
continue to provide support, funding support for the property sector.
Do you think, A, banks will comply with this?
And is it a good or bad thing for the sector, given that there might be a
potential build up of empires next year? Sure.
Yeah. And I think overall net net, I think
it's a positive for the banking sector because as I mentioned, the banking
sector had huge exposure to the property sector.
And if the situation continues to deteriorate, that might even evolve into
a bigger loss or even some kind of crisis.
So at this stage, to stabilize the property sector is critically important.
So having said that, yes, the banks as well keep paying and providing a lot of
financing. And, you know, having already said, you
know, I mentioned the losses, one point five trillion ET.
But if we are assuming these losses they're not taking in in one year, then
basically they are averaging three years.