China’s bad-loan ratio rose “significantly” in the first quarter, increasing risks for its banking industry, according to the nation’s largest manager of soured debt.
The business environment this year has been “grim and complicated” as lenders face pressures on asset quality, liquidity and lending margins, China Huarong Asset Management Co (中國華融資產管理) chairman Lai Xiaomin (賴小民) said during an internal meeting on Tuesday last week, according to a statement on the company’s Web site yesterday
China’s slowing economy has made it tougher for borrowers to repay debt, driving up banks’ sour loans for a ninth straight quarter as of December last year to the highest level since 2008, data from the banking regulator show.
New nonperforming loans amounted to more than 60 billion yuan (US$9.6 billion) in the first two months of this year, compared with 100 billion yuan for all of last year, China Business News reported on April 9.
Huarong’s profit in the first quarter climbed 75 percent to 5.1 billion yuan from a year earlier, surpassing its target, Lai said.
The ratio of sour loans to total lending at the 10 largest publicly traded banks in China rose 6 basis points last year to 0.99 percent.