Bad loans are staying at an 'excellent range'

The mainland's leading state-owned lenders expect non-performing loans to remain steady in the fourth quarter as the economy stabilises.

Li Lihui, president of Bank of China (BOC), said the non-performing loan level of the bank would remain stable in the fourth quarter and would improve next year, following the country's economy.

He said yesterday on the sidelines of the 18th national congress in Beijing that the bad loan levels of the mainland's banking industry had stayed below 1 per cent. "This is what we call an 'excellent range'," he said, adding that it is normal to see some volatility within the range.

The non-performing loan ratio at BOC, the mainland's fourth-largest lender by market value, fell slightly to 0.93 per cent in September from June, but the amount of non-performing loans grew 0.8 per cent to 64.1 billion yuan (HK$78.95 billion).

Li said his concern about the bank's bad loans arose from industries which had too much capacity.

Although some analysts said the non-performing loans of mainland banks will likely rise in the coming two to three quarters due to the lagging effect of the economic slowdown, lenders and the regulator were more positive.