Related News
Loan warning for China's banks
By Zhang Fengming |
June 29, 2010, Tuesday
|
Online Edition
Online Edition
BAD loans are set to rise in Chinese banks, with property and local government financial vehicles as sources of worsening assets, Moody's said today.
"A system-wide distress like the US's subprime crisis is unlikely in China but volatility exist in the housing and local government financial vehicles," said Yvonne Zhang, senior analyst of Moody's Investors Services, today in Shanghai.
The property sector is the main contributor of pledged assets, which has the highest delinquency ratio among loans with collateral.
A housing bubble is in the making before China tightens policy on the housing market, she said.
"Indicators of higher leverage, panic buying on skyrocketing prices, low returns and high vacancy ratios are pointing to the growing of a bubble before the new policy," Zhang said.
In mid-April, the State Council announced moves to cool off the red-hot home market, including stricter rules on individual mortgages.
It increased the minimum down-payment second-home mortgages to 50 percent from 40 percent. An extra 10 percent interest rate must be applied for second mortgages.
For those who buy three or more homes, even higher requirements on both down-payments and interest rates are levied.
The new policy immediately cut home sales, with prices dipping in some areas. More correction of the home prices are expected though not yet realized.
Banks in Shanghai may face combined losses of 5 billion yuan (US$732 million), or 8 percent of their pre-tax profits in 2009, if property prices drop 30 percent with limited and controllable impact on their sour loans, the Shanghai bureau of the China Banking Regulatory Commission said earlier, quoting lenders' pressure test.
"A system-wide distress like the US's subprime crisis is unlikely in China but volatility exist in the housing and local government financial vehicles," said Yvonne Zhang, senior analyst of Moody's Investors Services, today in Shanghai.
The property sector is the main contributor of pledged assets, which has the highest delinquency ratio among loans with collateral.
A housing bubble is in the making before China tightens policy on the housing market, she said.
"Indicators of higher leverage, panic buying on skyrocketing prices, low returns and high vacancy ratios are pointing to the growing of a bubble before the new policy," Zhang said.
In mid-April, the State Council announced moves to cool off the red-hot home market, including stricter rules on individual mortgages.
It increased the minimum down-payment second-home mortgages to 50 percent from 40 percent. An extra 10 percent interest rate must be applied for second mortgages.
For those who buy three or more homes, even higher requirements on both down-payments and interest rates are levied.
The new policy immediately cut home sales, with prices dipping in some areas. More correction of the home prices are expected though not yet realized.
Banks in Shanghai may face combined losses of 5 billion yuan (US$732 million), or 8 percent of their pre-tax profits in 2009, if property prices drop 30 percent with limited and controllable impact on their sour loans, the Shanghai bureau of the China Banking Regulatory Commission said earlier, quoting lenders' pressure test.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
