Chinese banks鈥 NPLs exceed US$299b
Print Edition
BAD loans in China’s banking sector exceeded 2 trillion yuan (US$299 billion) at the end of May and the bad loan ratio rose to 2.15 percent, prompting a senior regulatory official to warn that the lenders are facing the most severe situation.
The non-performing loans grew more than 280 billion yuan in the first five months of this year, said Yu Xuejun, chairman of the board of supervisors for major state-owned financial institutions under the China Banking Regulatory Commission.
Chinese banks are facing the most severe bad loan situation since they underwent a systematic restructuring and got listed in 2004, Yu said.
“The most important reason is due to continuing economic downward pressure,” Yu said. “The risk of bad loans at China’s banks will continue to rise in the near term. The whole sector should be cautious and guard against all kinds of possible risks triggered by asset bubbles and those related to local governments.”
The figures released by Yu reflected bad loans in China’s banking sector, including the Big Five lenders and commercial banks listed in both Hong Kong and mainland exchanges. NPLs at Chinese commercial banks alone rose to an 11-year high of 1.4 trillion yuan, or 1.75 percent of total bank lending at end-March.
On Wednesday, the CBRC published new draft guidelines, which require banks to set up comprehensive risk management systems to improve their ability to “identify, quantify, evaluate, monitor and control all kinds of risks” amid mounting bad loans.
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