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October 29, 2016

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Banks’ NPL ratio declines in Q3 as new loans extended

SHANGHAI banks’ bad-loan ratio fell in the third quarter of the year as lenders extended new loans for both corporations and individuals to counter the influence of the non-performing loans amid a cooling economy.

The NPL ratio of Shanghai banks dipped to 0.76 percent at the end of September, a drop of 15 percentage points from the beginning of this year, the Shanghai office of the China Banking Regulatory Commission said yesterday.

Loans on book surged 9.25 percent to 5.75 trillion yuan (US$849 billion) year on year in September among the local lenders, the industry regulator said.

Meanwhile, the total assets of Shanghai banking institutions grew 6.35 percent to 15.51 trillion yuan, the office added.

The decline in the NPL ratio was largely due to a credit-fueled property market that helped banks counter the slow disposal of banks’ bad debts, market insiders said.

Shanghai Daily reported previously that some developers tended to pay only 10 percent of the project down payment and raised the rest of the money from banks, while individual borrowers falsified their divorces in order to qualify to buy homes and get mortgages from banks.

“Shanghai banking institutions should keep guarding against rising bad loans and bad-loan ratio, as well as the credit risks hidden behind the property market,” the office said in a separate filing after its quarterly meeting yesterday.


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