China’s commercial bad loans continue to increase
(11 August 2016 – China) The total volume of bad loans in China has reached an 11-year high, data from the country’s banking regulator shows.
The total volume of non-performing loans (NPLs) at Chinese commercial lenders hit 1.44 trillion yuan (A$283 billion) at the end of the second quarter, the highest since 2005, data from the China Banking Regulatory Commission (CBRC).
Special mention loans, or credit that may sour quickly, rose 124.3 billion yuan during the second quarter to 3.32 trillion yuan, pushing the total amount of questionable commercial loans to 4.76 trillion yuan at end-June, the CBRC data showed.
The NPL ratio of Chinese commercial lenders stood at 1.75 percent at end-June, the same level as end-March.
The CBRC reported last month that commercial banks' NPL ratio rose to 1.81 percent at end-June, using a different approach to measure the statistics.
Key performance measures for commercial lenders continued to weaken in the second quarter.
Net profit earned by commercial banks in the second quarter slipped to 427.5 billion yuan, compared with 427.9 billion yuan in the same period a year prior, the CBRC data shows.
Commercial banks' weighted average core Tier 1 capital adequacy ratio declined to 10.69 percent at end-June, down from 10.96 percent at end-March.
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