Millennium Post

Second largest economy China has $113-billion bank bad loans

The non-performing loans for commercial banks in China have climbed to $112.84 billion in the last four months, registering an increase of 1.08 per cent, and sparking concerns a slow economy could weigh on banks. By the end of June, non-performing loans in the banking sector stood at 694.4 billion yuan ($112.84 billion), a jump of 48.3 billion yuan from the previous quarter, according to a report released by China Banking Regulatory Commission.

The regulator said the banks’ credit risks were slightly up but the quality of their credit assets remained generally stable. In addition, the sector had fairly strong capability of risk compensation,
with a loan loss reserve totalling 1.83 trillion yuan ($30 billion) at the end of June.

In the first six months, profits of China’s commercial banks rose 13.96 year-on-year to 858.3 billion yuan, the report said. During the same period, loans targeting agriculture climbed 16.6 per cent year-on-year while those for small and micro businesses increased 16.9 per cent, as China stepped up credit support for the two sectors.

Weighed down by mounting debt of the provincial governments China last year had ordered a nationwide assessment of their liabilities to address concerns about rising debt from overambitious development projects threatening the financial stability of the world’s largest economy.

After two months of nationwide audits, the National Audit Office disclosed that governments at various levels were liable for a total direct debt of 20.7 trillion yuan ($3.4 trillion) at the end of June last year, up 8.6 per cent, or 1.63 trillion yuan, since the end of 2012.

China’s mounting government debt is considered as a latent danger to financial stability and Chinese government has started to take steps to address the issue.  

Next Story
Share it