Bad loans rise as growth slows

Mainland banks' bad loans rose to the highest level since 2008 in the third quarter of this year as a property slump and an economic slowdown boost the odds that soured credit will keep climbing.

Non-performing loans rose 72.5 billion yuan (HK$91.7 billion) from the previous quarter to 766.9 billion yuan, the China Banking Regulatory Commission said at the weekend. Soured credit accounted for 1.16 per cent of lending, up from 1.08 per cent three months earlier.

Banks' bad-loan coverage ratio fell to 247.2 per cent at the end of September from 262.9 per cent in June. Their capital adequacy ratio rose to 12.93 per cent from 12.4 per cent.

Industrial and Commercial Bank of China, the world's largest lender by assets, last month reported its biggest quarterly jump in bad loans since at least 2006.

Stresses in the economy are visible through companies such as Sinosteel Corp, a state-owned miner and steel trader that in September reported financial difficulties. The mainland's gross domestic product is expected to grow 7.4 per cent this year, the least since 1990.