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Chinese Banks’ NPL Ratio Climbs to 0.97Pc by End of Q3: Report

12-27 10:41 Caijing
The sharp rises in NPLs had much to do with imbalances in the nation's macro-economic structure, overcapacity in some industries and the slowing economic growth, the report said.

The average non-performing loans (NPLs) ratio in Chinese banks rose to 0.97 percent at the end of the third quarter of 2013 with non-performing loans growing substantially from nine months ago especially, according to a report by a Chinese rating firm.

The NPL ratio was at 0.95 percent at the end of 2012, when outstanding NPLs jumped to 492.9billion yuan before soaring to 563.6billion yuan nine months later, China Chengxin International Credit Rating Co., Ltd. (CCXI) said in its 2013 ratings report on China's banking industry.

Of the 64.7billion yuan newly-added NPLs in the first three quarters, about 57billion, or 80.6 percent came from publicly-listed banks due to their leading market shares in Yangtze River delta region and the eastern coastal area of China where major overcapacity-hit industries concentrate.

The sharp rises in NPLs had much to do with imbalances in the nation's macro-economic structure, overcapacity in some industries and the slowing economic growth, the report said.

Credit risks largely concentrated in Jiangsu and Zhejiang, two provinces in east China which are natural home to industries with excess capacity like steel, solar and shipping, said Zhang Jiameng, a CCXI analyst.

Statistics showed almost 90 percent of the newly-added NPLs in banks happened in the two regions.

Loopholes in risk controls and rampant lending also added to rising NPLs, it noted.

CCXI warned that the upward trend in bad loans is likely to continue as the country is going through economic structure changes, which will further test banks' capability to control risks.

To cope with bloating bad loans and keep risks under control, Chinese banks are improving their NPL coverage ratio which was at 292.5 percent at the end of June. The banks reported a total net profit of 753.1billion yuan, up 13.83 percent from a year earlier, said the report.

 

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