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Bad loans in Shanghai’s banks drop to a 4-year low in Q1

BAD loan ratio of banks in Shanghai dipped to a four-year low in the first quarter of 2017, the city's banking regulator said today.

Non-performing ratio decreased to 0.6 percent by the end of March, comparing with 0.68 percent by 2016. Loan balance rose 12.7 percent year on year to 6.3 trillion yuan (US$913 billion), while total assets of Shanghai banks grew 8.9 percent to 14.2 trillion yuan by the first quarter, according to Shanghai bureau of the China Banking Regulatory Commission.

Shanghai lenders should prevent risks more actively, and put financial risk control high on the agenda, according to a statement sent by the regulator.

Banks should check strictly on their interbank lending business, put a ban on issuing products that are repackaged as short-term products and are cross-held by financial institutions. Banks should also be cautious on the business cooperation with real estate agencies, and prevent credits flowing into the property market in cases beyond current credit policy, according to the regulator.

The local announcement followed by a regulatory storm recently, as the China Banking Regulatory Commission has issued seven policy documents in weeks.

New policies focus on risks from shadow banking, and lending between financial institutions in the interbank market.

Shadow banks tap interbank funding to add leverage to off-balance-sheet wealth management products in order to offer higher yields. Many are worried that the scope of such investments had intensified systematic financial risks by building up the leverage chain.

Off-balance-sheet asset management products has tapped 30 trillion yuan by the end of 2017, according to data compiled the central bank earlier.


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