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Chinese banks target SMEs

Chinese banks target SMEs

(12 December 2005 – China) Industrial and Commercial Bank of China (ICBC) is looking to increase its lending to SMEs despite a rise in its bad loan ratio over the past quarter. ICBC said 22 percent of all new lending that occurred between January and November of this year was to SMEs, amounting to 162 billion yuan (US$20 billion). This was up a third on the same time last year.

The bank said lending to SMEs was a "must for Chinese commercial banks" as the market for traditional banking services was becoming smaller.

Historically, Chinese banks have lent to the state owned sector but most growth is now being driven by private businesses.

"There is great demand for loans from SMEs," ICBC said.

Despite efforts from the Chinese government to help state owned banks clear some of the bad debts on their books, ICBC said its bad loan ratio had increased to 4.6 percent in the September quarter from 4.5 percent at the end of June.
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