China's banking regulator warns on loans to local gov'ts, real estate sector

10:19, June 16, 2010      

Email | Print | Subscribe | Comments | Forum 

China's banking regulator warned Tuesday the nation's banking system faces major risks, the prominent being loans made to local governments and the real estate sector turning bad.

The China Banking Regulatory Commission (CBRC) urged banks to use scientific analysis in their lending in its 2009 annual report, published Tuesday on its website.

The report said some banks were lending large amounts to local government units with inadequate risk management, and that lending to local governmental vehicles entails significant potential risk.

The average non-performing loan (NPL) ratio at the country's commercial banks fell to 1.58 percent at the end of 2009, declining 0.84 percentage points from the level at the beginning of the year, according to the report.

Despite the NPL ratio remaining low, CBRC Chairman Liu Mingkang, said in the report some credit assets could turn into losses this year.

"Domestically, the soundness of the banking sector is being tested by increased pressure for an NPL rebound. There are risks associated with lending to local government financing platforms, the real estate sector and industries with excess capacity," Liu was quoted as saying in the report.

"Internationally, fundamental flaws underlined by the recent global financial crisis have not been resolved," Liu said.

Trade protectionism and disputes, sovereign debt crises and high unemployment rates pose possible new challenges to the world economy, he added.

In 2009, China's banking industry net profit hit 668.4 billion yuan (98 billion U.S. dollars) with a return on equity of 16.2 percent, the report said.

The banking industry's total assets totaled 78.8 trillion yuan at the end of 2009, up 26.2 percent compared to the start of the year, according to the report.

Source: Xinhua

(Editor:张心意)

  • Do you have anything to say?

双语词典
dictionary

  
Special Coverage
  • Premier Wen Jiabao visits Hungary, Britain, Germany
  • From drought to floods
Major headlines
Editor's Pick
  • Giant red lantern lights up in Tiananmen Square to celebrate the coming National Day on Oct. 1. (Xinhua/Li Xin)
  • A ceremony is held in Taipei, southeast China's Taiwan, on Sept. 28, 2011, to commemorate the 2,562nd birthday of Confucius (551-479 BC), a Chinese thinker, educationist and philosopher. (Xinhua/Wu Ching-teng)
  • The world's first Boeing 787 Dreamliner for delivery arrives at Haneda airport in Tokyo, capital of Japan, on Sept. 28, 2011. The Boeing 787 Dreamliner, whose buyer is All Nippon Airways (ANA), will implement a flight of ANA on Oct. 26 from Tokyo's Narita Airport to Hong Kong in south China. (Xinhua/Ji Chunpeng)
  • A Libyan National Transitional Council (NTC) fighter shows what is believed to be human jawbone found inside a mass grave near Abu Salim prison in Tripoli, Libya, Spet. 27, 2011. The NTC on Sunday said they had found a mass grave containing the bodies of 1,270 people killed by Gaddafi's security forces in a 1996 massacre at Abu Salim prison in southern Tripoli. (Xinhua/Li Muzi)
  • Rescue workers and local residents search for survivors after a building collapsed in old Delhi, India, Sept. 27, 2011. At least 10 people were killed and 35 injured when an old three-storey building collapsed. More than a dozen people are still feared trapped under the debris, police said. (Xinhua/Partha Sarkar)
  • A visitor has flying experience in the windmill castle of Jinshitan National Holiday resort in Dalian, northeast China's Liaoning Province, Sept. 27, 2011. The castle is a 23-meter-high building with 21 meters in diameter. The castle uses wind tunnel to make objects floating in the air. It is the first indoor stadium in China, which enables people to have flying experience. (Xinhua/Zhang Chunlei)
Hot Forum Discussion