Core Viewpoint - The article discusses the negative impact of non-performing loan (NPL) securitization on the profitability of commercial banks, emphasizing that it does not effectively reduce the NPL ratio as intended [2][19]. Summary by Sections Securitization Process - A bank issued a securitized product based on personal credit NPLs, with a total asset pool amounting to 1.2 billion yuan, including 1.11 billion yuan in principal and 90 million yuan in interest and fees [3][4]. - The expected total recovery from these NPLs over 2-3 years is 237 million yuan [3]. Cash Flow and Recovery Analysis - During the transition period, approximately 105 million yuan was recovered, accounting for 60.73% of the investment amount [5]. - In the year of issuance, 135 million yuan was recovered, representing 78.08% of the investment amount [6]. - Over the first year, a total of 204.5 million yuan was recovered, exceeding the investment amount of 172.9 million yuan [7]. Impact on NPL Reduction - The bank effectively reduced its NPLs by 1.82 billion yuan through securitization, but still had to write off a difference of 928 million yuan between the principal and the amount received [8]. - The article questions whether the cash flow received through securitization is genuinely "advanced," as the bank could have received similar amounts without securitization [9][10]. Long-term Recovery Comparison - Over a full year, the total recovery from the NPLs was significantly higher than the amount received through securitization, suggesting that not securitizing would have led to better NPL management [12]. - If the bank continues to issue securitized products annually, the effectiveness of this method in reducing NPLs diminishes over time [13]. Risk Classification and Profitability - Securitization leads to the loss of potential risk classification adjustments, as the underlying assets no longer belong to the bank, which could have been reclassified from non-performing to performing [18]. - The article concludes that the costs associated with securitization, including the need to write off non-compliant loans, negatively impact the bank's profitability [19][17]. Conclusion - Overall, the article argues that the perceived benefits of NPL securitization are misleading, as traditional methods of recovery and write-offs could achieve similar or better results without the associated costs and risks of securitization [19][20].

Core Viewpoint - The article argues that securitization is not an effective method for disposing of non-performing loans, despite its appearance of providing immediate liquidity and reducing the bank's non-performing loan balance [2][3]. Summary by Sections Securitization Process - A bank issued a securitized product based on personal credit non-performing loans, with a total principal amount of 11.10 billion yuan and an expected recovery of 2.37 billion yuan over 2-3 years [3][5]. - The securitized product was issued for 1.82 billion yuan, which is only 16.40% of the total principal amount [4]. Investor and Bank Perspectives - Investors are attracted to the securitized product because the expected recovery of 2.37 billion yuan exceeds the issued amount of 1.82 billion yuan, providing potential profit [6]. - The bank benefits from securitization by reducing its non-performing loan balance and receiving service fees for managing the loans post-securitization [7]. Profit Impact Analysis - The actual recovery from the securitized loans during the transition period was 1.05 billion yuan, which is 60.73% of the investment amount received [11]. - If the bank had not securitized, it could have potentially increased its profit by approximately 1.14 billion yuan through recovery and reversal of provisions [19][21]. Accounting and Provisioning - The securitized loans had a book value of 1.725 billion yuan after provisioning, and the profit from the securitization was only 0.004 billion yuan, indicating minimal financial benefit [16][19]. - The article highlights that the bank's profit from securitization is limited due to the high level of provisions already accounted for [20]. Long-term Implications - The article suggests that securitization may lead to a long-term negative impact on the bank's profitability, as future recoveries from the securitized loans will not contribute to the bank's profits [21]. - The potential for multiple securitizations could cumulatively result in significant profit losses for the bank [21].