China's commercial banks reported lower rates of non-performing loans in the
first nine months of the year, the industry regulator said Tuesday.
China Banking Regulatory Commission (CBRC) statistics showed that
non-performing loans for the country's major commercial banks stood at 1.2
trillion yuan (US$152 billion) by the end of September, 46.9 billion yuan
(US$5.9 billion) lower than at the end of 2005.
The bad-loan ratio was 7.6 per cent, 1.3 percentage points lower than the end
of last year.
The combined non-performing loans of five State-owned banks fell 1.2
percentage points to 1.1 trillion yuan (US$139 billion), or 9.3 per cent of
total lending, by the end of last month.
Twelve joint-stock banks had total outstanding bad loans of 116.8 billion
yuan (US$14.8 billion), 30.5 billion yuan (US$3.9 billion) lower than at the end
of 2005. The bad-loan ratio of joint-stock banks fell 1.3 percentage points to
2.9 per cent.
The figures show that the banking sector has made progress in improving risk
management and that the government's push to tighten lending has taken effect,
the CBRC said.
In recent months, the government has repeatedly urged domestic banks to be
cautious about lending to sectors that face overcapacity.
"The banks should continue to restrain the pace of lending growth," Liu
Mingkang, the CBRC's chairman, said at its meeting yesterday.
He said that recent rapid growth of mid- and long-term loans for fixed-assets
investment projects increased the potential risks to the country's banking
industry.
Mid- and long-term loans grew 21.4 per cent in the first nine months of the
year to 10.9 trillion yuan (US$1.38 trillion). The growth was 6.8 percentage
points higher that that of total lending.
"With both domestic and global economic growth cooling, the problem of
excessive liquidity and overcapacity in some industries will persist, meaning
those risks to banks may gradually surface," Liu said.
To improve the banks' ability to fend off risks, the regulator has urged
banks to raise their capital-adequacy ratios. By the end of September, 55 banks
had capital-adequacy ratios of above 8 per cent, two more than at the end of
last year.
The banking sector has also diversified its loan structure by offering more
credit to small enterprises and to the agricultural sector to improve risk
management.
By the end of last month, rural financial institutions' outstanding loans to
the agricultural sector rose 20 per cent year-on-year to 1.3 trillion yuan
(US$164.6 billion), the CBRC statistics showed.
And the banking regulator's detection of irregularities and illegal
activities has made progress in the first nine months of the year.
It uncovered 724 cases of irregularities among domestic lenders, about
one-fifth fewer than in the same period last year.
