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Don Weinland

Chongqing Rural Commercial Bank shares fell yesterday after the mainland bank reported a substantial jump in non-performing loans.
The stock dropped 6 per cent to close at HK$3.76 on news that non-performing loans had risen 16.6 per cent to 1.92 billion yuan (HK$2.42 billion) in the first half of the year from the same period last year.
The non-performing loan ratio reached 0.85, from 0.8 per cent at the end of last year, the bank's officials said at the release of first-half earnings yesterday.
"[Non-performing loans] are expected to rise," said May Yan, an analyst at Barclays Research. "But the magnitude [at Chongqing Rural] was a bit higher than expected."
The bank posted net interest income of 8.85 billion yuan for the first half, up 16.6 per cent year on year. Net profit rose 11.86 per cent to 3.6 billion yuan.
Earnings per share climbed to 39 fen from 35 fen.
Among its peers, Bank of Chongqing, which listed in Hong Kong last year, saw its shares finish 1.52 per cent lower at HK$5.19 yesterday.
The H-share index closed 0.35 per cent lower on the day.
Chongqing Rural, the first mainland regional bank to list in Hong Kong in 2010, kicked off earnings reports for H-share banks.
Investors will watch carefully for increasing bad loans as the mainland's economic growth faces uncertainties in the second half of the year.
Some analysts said rising bad loans were already priced into valuations.
Among the mainland banks, Chongqing Rural had a relatively high level of exposure to local government financing vehicles last year. About 11 per cent of its loans went to local government platforms, far higher than the average of 6.24 per cent at the nine largest mainland banks, data from Barclays shows.
However, manufacturing, rather than local government debt, likely accounted for the increase in Chongqing Rural's bad loans in the first half, Yan said.
The bank downgraded a 473 million yuan loan to a chemical company to "sub-standard" after the company was unable to meet environmental protection requirements, the bank's manager of financial planning, Liang Ping, said.
Non-performing loans of banks in the second quarter rose 0.04 percentage point to 1.08 per cent, according to the mainland's banking regulator.
Joint-stock banks had become increasingly cautious in lending this year, Yuanta Securities analyst Erin Lee said, adding the country's biggest state banks were likely to write off their bad loans.
BOC Hong Kong (Holdings) is to report interim results today while Harbin Bank reports tomorrow.
UBS said in a report this month first-half profits at state-owned banks, joint-stock banks and regional banks would grow 9 per cent, 10 per cent and 14 per cent, respectively.


Jump in bad loans sparks sell-off in Chongqing Rural Commercial Bank shares

Chongqing Rural Commercial Bank reported higher profits.

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Chongqing Rural Commercial Bank shares fall 6pc on 16.6pc increase in non-performing loans


Chongqing Rural Commercial Bank shares fell yesterday after the mainland bank reported a substantial jump in non-performing loans.


Jump in bad loans sparks sell-off in Chongqing Rural Commercial Bank shares

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Chongqing Rural Commercial Bank shares fall 6pc on 16.6pc increase in non-performing loans

Chongqing Rural Commercial Bank shares fall 6pc on 16.6pc increase in non-performing loans