China economy

Mainland banks' bad loans keep on rising

PUBLISHED : Friday, 16 November, 2012, 12:00am
UPDATED : Monday, 30 May, 2016, 5:00pm


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Non-performing loans at mainland banks have risen for a fourth consecutive quarter, and analysts say economic uncertainty will continue to put pressure on the asset quality of lenders.

Bad loans in the third quarter rose 22.4 billion yuan (HK$27.7 billion), or 4.9 per cent, to 478.8 billion yuan from the second quarter, the China Banking Regulatory Commission (CBRC) said yesterday.

It is the longest streak of asset deterioration since 2004, when the data first became available.

Non-performing loans will continue to rise this quarter and until early next year despite recent green shoots in the economy, said She Minhua, an analyst at Zhong De Securities.

"The impact on banks' asset quality would lag behind the weakness in the economy for about three quarters," he said.

Non-performing loans increased at all types of banks in the third quarter. Large commercial banks' bad loans rose 1.7 per cent from the second quarter, and those at city commercial banks went up by 5.2 per cent.

The non-performing loan ratio rose 0.01 per cent from the second quarter to 0.95 per cent, the CBRC said.

Some analysts said uncertainties in the global economy will continue to cloud the outlook for banks' asset quality, in export-dependent regions in particular.

In Wenzhou, Zhejiang province, the non-performing loan ratio rose for 13 straight months to 3.27 per cent at the end of September, a report by China Business News said last month.

Loans to government financing platforms and property loans face rising default risks, She said.

"But I think the risks are manageable if there is not systemic risk, as banks have made adequate provision," he said.