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Banks' non-performing loan ratio to rise: Deloitte
By Hu Xiaocen |
April 5, 2012, Thursday
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Online Edition
Online Edition
AS in the middle of 2011 to 2013, when the local governments' 2- and 3- year loans originated in the peak 2008 vintages mature, the banks' non-performing loan ratio is expected to rise moderately in 2012, said Deloitte in a banking industrial report today.
Deloitte said loan risks of financing platforms of the local government will be fundamentally under control by 2012.
According to the National Audit Office's report in June, 80 percent of local governments' debts are bank loans, with a total amount of 8.5 trillion yuan (US$1.34 trillion yuan), among which about 5.6 trillion yuan of the loans will reach maturity during the period of 2011 to 2013.
The rating agency Moody's made an assessment of local governments' debts last year, and projected that 8 to 12 percent of their bank loans are expected to become NPLs.
Despite the presence of potential risks of the local governments' financing platforms, Deloitte did not see a large scale of bad debts in the picture, although the banks' NPL ratios are expected to increase moderately in 2012, said the consultancy firm.
"The monopoly stance of Chinese state-owned banks is in question, but it is true that they are enjoying a higher net interest margin than banks operating overseas at present. The Chinese lenders largely rely on its interest income to grow. They need to develop intermediate businesses to boost non-interest income in the future," said Liu Minghua, a Deloitte partner.
Deloitte said loan risks of financing platforms of the local government will be fundamentally under control by 2012.
According to the National Audit Office's report in June, 80 percent of local governments' debts are bank loans, with a total amount of 8.5 trillion yuan (US$1.34 trillion yuan), among which about 5.6 trillion yuan of the loans will reach maturity during the period of 2011 to 2013.
The rating agency Moody's made an assessment of local governments' debts last year, and projected that 8 to 12 percent of their bank loans are expected to become NPLs.
Despite the presence of potential risks of the local governments' financing platforms, Deloitte did not see a large scale of bad debts in the picture, although the banks' NPL ratios are expected to increase moderately in 2012, said the consultancy firm.
"The monopoly stance of Chinese state-owned banks is in question, but it is true that they are enjoying a higher net interest margin than banks operating overseas at present. The Chinese lenders largely rely on its interest income to grow. They need to develop intermediate businesses to boost non-interest income in the future," said Liu Minghua, a Deloitte partner.
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