China Commercial Banks Non-performing loan Ratio Falls to 1.77%

飞雪寒冰

China's commercial banks had a combined non-performing loan ratio of 1.77 percent at the end of June, down 0.65 percentage points from the beginning of the year, the China Banking Regulatory Commission said.

Outstanding bad loans totaled 518 billion yuan at the end of June, down 42.2 billion yuan from the beginning of the year, the CBRC said in a July 17 statement on its Web site.

The NPL ratio at state-owned commercial banks was 1.99 percent at the end of June, down 0.81 percentage points from the beginning of the year, while their outstanding bad loans totaled 376.4 billion yuan, down by 44.5 billion.

Joint-stock commercial banks had an NPL ratio of 1.03 percent at end-June from 1.35 percent at the beginning of the year, while outstanding bad loans totaled 67.2 billion yuan, up 1.5 billion from the beginning of the year.

City commercial banks posted a combined NPL ratio of 1.85 percent at the end of June, a drop of 0.48 percentage points from the beginning of this year, while NPL ratio at rural commercial banks falling to 3.2 percent from 3.94 percent.

In addition, combined NPL ratio of foreign banks incorporated in China were 1.03 percent at the end of June.

Commercial banks include state-owned banks, joint-stock banks, city commercial banks, rural commercial banks and foreign banks incorporated in China.

飞雪寒冰

The apparent improvement masks the reality that loans surged in 2009 and may be too new to be reflected in the bad-loan data. Banks issued new loans so indiscriminately during the year - 7.37 trillion yuan in the first half – raising questions about the quality of the projects receiving funds.

China's central bank has recently stepped up the issue of one-year bills and raised rates on short-term repo agreements in a bid to drain excess liquidity, while at the same time ensuring adequate funds remain available to fuel the revival of the economy.

Banks face a tough task keeping their balance sheets clean while under orders to lend from Beijing. The People's Daily newspaper reported earlier that just 5 percent of new loans this year have found their way to small and medium sized enterprises, the primary source of new jobs and productivity gains, driving speculation that China's recovery is too heavily focused on propping up inefficient state-run companies.

National Bureau of Statistics chief Li Xiaochao said at a news conference that the foundation of China's recovery remains "weak" and "unbalanced," despite improved second quarter GDP data.

China's GDP grew 7.9 percent year-on-year in the second quarter, largely spurred by a massive rise in fixed-asset investment, up 35 percent year-on-year in June.
The assets of the country's banking sector totaled 73.7 trillion yuan at the end of June, up 27.7 percent year-on-year, while total liabilities reached 69.8 trillion yuan, up 28.2 percent from a year earlier.