Mainland bank regulators are concerned that the rapid growth of loans by the nation's lenders could pose serious risks, reflecting mounting worries over a possible new wave of bad debt. Jiang Dingzhi, a vice-chairman of the China Banking Regulatory Commission, said the strong loan growth in the first quarter had helped support the economy but there could be some areas of concern. It was the first time a senior banking official has publicly expressed concern following the release of the record loan growth figures for the first quarter. The regulator was not aware of any money from the loans flowing into the stock market, as some had suspected, Mr Jiang told the China Securities Journal, but the CBRC would keep an eye on it. Mr Jiang did not specifically mention bad loans. But while the central bank and other government authorities have called for banks to increase their lending, the CBRC has repeatedly cautioned against the risk of rising non-performing loans. Moreover, a recent survey by China Orient Asset Management Corp indicated financial experts think non-performing loans could start to rise significantly in the second half of the year. In the first three months, new loans worth 4.58 trillion yuan (HK$5.2 trillion) - 91.6 per cent of Beijing's loan target for this year - were extended to companies and individuals as the government chased high economic growth. 'Concern about rising non-performing loans is mounting,' Orient Asset said in its report. 'Seventy-nine per cent of respondents expect non-performing loans could rise significantly in the second half of this year to the second half of 2010.' The firm added that 18 per cent of the respondents expected non-performing loans would rise significantly while 73 per cent believed bad debts would increase. It received 333 responses from commercial banks, asset management companies, investors and intermediaries for its survey. In 2004, the Ministry of Finance gave the company the task of taking up 140 billion yuan in bad debt from Bank of China under the financial reform programme. More than half of the respondents in the survey expected that, geographically, the highest credit risk area would be the Pearl River Delta, but the property sector could be the top credit risk sector. 'The risk of rising non-performing loan amounts and the non-performing loan ratio in mainland banks is accumulating because the economy is slowing,' said Standard & Poor's analyst Liao Qiang. 'However, bad loans are not a big concern at the moment.' Mr Liao said low-risk bill financing accounted for a big proportion of the loans in the first quarter. However, a credit officer in a Shanghai branch of a leading bank said loan quality was threatened as banks rushed to lend. 'We are competing with each other to extend loans,' said the officer. 'Sometimes my colleagues approve loans with lowered standards.' Meanwhile, the CBRC is checking to see whether new loans from October last year to the end of February by the biggest lenders were granted properly, the 21st Century Business Herald quoted sources as saying. The report said loans by Industrial and Commercial Bank of China, Bank of China, Agricultural Bank of China, China Construction Bank Corp and Bank of Communications were being examined.