China's Banking Sector Sees Declining Non-performing Loans

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Last updated at: (Beijing Time) Friday, August 08, 2003

China's Banking Sector Sees Declining Non-performing Loans

The total amount and ratio of non-performing loans (NPL) of China's major domestic financial institutions declined considerably in the first half of this year,official statistics showed Thursday.

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The total amount and ratio of non-performing loans (NPL) of China's major domestic financial institutions declined considerably in the first half of this year,official statistics showed Thursday.

According to figures from the China Banking Regulatory Commission (CBRC), the NPL surplus totaled 2.54 trillion yuan by the end of June, a decrease of 93.4 billion yuan from the beginning of the year. The NPL ratio was 19.6 percent, down 3.51 percentage points.

These major financial institutions include four state-owned commercial banks, three policy banks and 11 shareholding commercial banks, whose aggregate loans accounted for 82 percent of the total in China at the end of June.

A CBRC spokesman said the three types of financial institutionsreduced their NPL surplus by 81.1 billion yuan, 6.6 billion yuan and 5.7 billion yuan respectively in the six months, cutting down their NPL ratio by 4.02 percentage points, 1.18 percentage points and 3.51 percentage points.

Despite the improved quality of loans in the first six months of 2003, the spokesman said that the total volume of NPL is still large and the NPL ratio remains high.

He attributed the decline of the NPL ratio partly to the soaring total volume of loans in the first six months.

In the second half of 2003, the official said, the CBRC will strengthen its supervision efforts and update the regulatory methods and criteria to prevent and dissolve financial risks the Chinese banking system faces.

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