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Survey: worst time for China's economy has gone
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14:42, September 09, 2009

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56 percent of Chinese bankers believed that the worst time for China's economy had gone and that long-term supporting factors to the banking sector's development had remained unchanged, according to a survey jointly conducted by China Banking Association and PricewaterhouseCoopers (PwC).

Surging new loans in the first half of 2009 was a focus of the survey. 70 percent of the bankers involved it believed that total new bank loans in 2009 would be at least 20 percent higher than the previous year.

Narrowing interest margin was regarded by 90 percent of the bankers surveyed as the biggest challenge facing them. Since the end of 2008, most of new bank loans have floated to infrastructure construction sector and central enterprises. Expanding credit became the main strategy of Chinese banks.

However, credit surge in the first half didn't bring high profit for the banking sector. The high executives of Chinese banks are currently more interested in adjustment of credit structure.

"Banks should improve their credit structure to help China's the economic restructuring," said Zhu Xiaohuang, vice-president of China Construction Bank (CCB).

Chinese banks' operation risk is another hot topic. 55 percent of bankers surveyed believed that non-performing loans (NPLs) may rise in the future. 80 percent of them however estimated that their banks' NPL ratio would remain below 5 percent.

Concern should go to issues including long-term loans and concentration of credit, Wang Huaqing, disciplinary secretary of the China Banking Regulatory Commission (CBRC).

The banks have seen a declining trend of their capital adequacy ratios. Some small and medium sized banks are facing mounting pressure of capital inadequacy.

"Loans are banks primary asset category and rely heavily on their capital. This traditional development mode should be changed," said Ba Shusong, deputy head of Financial Research Institute of Development Research Center of the State Council.

By People's Daily Online

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