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Lenders in China post decline in bad loans

COMMERCIAL banks in China continued to see declines in both non-performing loans and their ratio in total outstanding loans in the first quarter, said the banking regulator yesterday.

The NPL ratio of lenders, including foreign banks in China, was 2.04 percent at the end of last month, down 0.38 percentage points from the beginning of this year, said the China Banking Regulatory Commission in a statement.

The decrease followed last year's sharp fall in NPL ratio, which was 2.45 percent at the end of last year, down 3.71 percentage points from a year earlier.

Outstanding bad loans stood at 549.5 billion yuan (US$80.3 billion) at end of last month, 10.8 billion yuan less than at the start of this year, said the commission.

By the end of last month, banking institutions held total assets worth 69.4 trillion yuan in China, up 25.1 percent from a year earlier, according to the banking watchdog.

It said total liabilities of banking institutions in China were 65.5 trillion yuan at the end of last month, up 25.4 percent from a year earlier.

There should be broader regulation of financial institutions and markets and tighter risk control to avoid losses that were incurred amid the global financial crisis, the commission's Vice Chairman Jiang Dingzhi said at a forum yesterday.

Chinese banks are in a relatively better position than their Western peers to withstand the financial turmoil as they had overall limited exposure to investments related to subprime loans in the United States, where the financial crisis originated.

The Chinese government has adopted a moderately loose monetary policy to encourage more credit supply as a way to spur economic growth since late last year, sparking worries about more bad loans.


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