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Friday 27 February 2009
Regulator to put lid on bad loans
China aims to prevent a ‘massive rebound’ in non-performing loans, even as the world’s financial crisis deepens, the nation’s top banking regulator said.
(BEIJING) China aims to prevent a ‘massive rebound’ in non-performing loans, even as the world’s financial crisis deepens, the nation’s top banking regulator said.
The non-performing loan ratio at Chinese banks fell to 2.45 per cent at the end of December, from 6.17 per cent a year earlier, China Banking Regulatory Commission (CBRC) chairman Liu Mingkang said at a conference here yesterday.
Excluding bad loans at Agricultural Bank of China and earthquake-related defaults, the ratio dropped by 0.84 percentage points from a year earlier.
Loan defaults are the biggest single threat to Chinese banks, which face ‘a choppy 2009’ because bad debts may swell after economic growth slowed to 6.8 per cent in the fourth quarter, the weakest pace in seven years, Fitch Ratings said in January.
Still, domestic lenders offered a record 1.62 trillion yuan (S$361.7 billion) of new advances in January, heeding the government’s call to help finance its four trillion yuan stimulus plan to revive the economy.
The surge in credit has prompted the central bank and the banking regulator to survey lenders for details of the recipients and terms of the loans, in part to ensure that lending isn’t funnelled into the stock market, a person with knowledge of the matter said. The Shanghai Composite Index has rallied 21 per cent this year, the best performance among 90 benchmarks tracked by Bloomberg.
‘Our general assessment is that the fundamentals of these loans are normal,’ Mr. Liu said. Given such a rapid decline in economic growth, ‘it’s necessary to boost the intensity and pace of credit support to help companies in difficulties’.
Banks extended 1.62 trillion yuan of new local currency loans in January. M2, the broadest measure of money supply, climbed 18.8 per cent, the fastest pace in more than a year.
The biggest proportion of new lending, 39 per cent, was through discounted bills, which supply working capital.
Medium and long-term corporate loans accounted for 32 per cent, according to the People’s Bank of China.
Chinese banks increased their combined profit by 31 per cent in 2008 to 583.4 billion yuan and their profit growth this year will outperform their overseas peers, Mr. Liu said.
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Regulator to put lid on bad loans
Bloomberg
27 February 2009
(BEIJING) China aims to prevent a ‘massive rebound’ in non-performing loans, even as the world’s financial crisis deepens, the nation’s top banking regulator said.
The non-performing loan ratio at Chinese banks fell to 2.45 per cent at the end of December, from 6.17 per cent a year earlier, China Banking Regulatory Commission (CBRC) chairman Liu Mingkang said at a conference here yesterday.
Excluding bad loans at Agricultural Bank of China and earthquake-related defaults, the ratio dropped by 0.84 percentage points from a year earlier.
Loan defaults are the biggest single threat to Chinese banks, which face ‘a choppy 2009’ because bad debts may swell after economic growth slowed to 6.8 per cent in the fourth quarter, the weakest pace in seven years, Fitch Ratings said in January.
Still, domestic lenders offered a record 1.62 trillion yuan (S$361.7 billion) of new advances in January, heeding the government’s call to help finance its four trillion yuan stimulus plan to revive the economy.
The surge in credit has prompted the central bank and the banking regulator to survey lenders for details of the recipients and terms of the loans, in part to ensure that lending isn’t funnelled into the stock market, a person with knowledge of the matter said. The Shanghai Composite Index has rallied 21 per cent this year, the best performance among 90 benchmarks tracked by Bloomberg.
‘Our general assessment is that the fundamentals of these loans are normal,’ Mr. Liu said. Given such a rapid decline in economic growth, ‘it’s necessary to boost the intensity and pace of credit support to help companies in difficulties’.
Banks extended 1.62 trillion yuan of new local currency loans in January. M2, the broadest measure of money supply, climbed 18.8 per cent, the fastest pace in more than a year.
The biggest proportion of new lending, 39 per cent, was through discounted bills, which supply working capital.
Medium and long-term corporate loans accounted for 32 per cent, according to the People’s Bank of China.
Chinese banks increased their combined profit by 31 per cent in 2008 to 583.4 billion yuan and their profit growth this year will outperform their overseas peers, Mr. Liu said.
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