Banks "highly concerned" about loans to the real estate industry

14:13, February 04, 2010      

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Facing the expectation of tightened monetary policies, domestic commercial banks simultaneously stated that they are "highly concerned" about the realty industry.

China's moderately loose monetary policy since late 2008 and support measures for the real estate industry led to a boom in the first half of 2009.

However, the rocketing housing market faces hidden risks. China's State Council and relevant government branches released a series of regulatory policies aimed at the realty industry.

"In fact, commercial banks are always concerned about the risks in real estate loans," said an official with the individual housing mortgage department of a state-owned bank.

In the first two weeks of 2010, new loans from domestic commercial banks hit 1.45 trillion yuan (212.42 billion U.S. dollars). Both the central and local banking regulators urged the banks to focus on housing loans risks.

In Shanghai, outstanding loans to the real estate industry accounts for 27 percent of the total outstanding loans, according to Yan Qingmin, head of Shanghai Branch of China Banking Regulatory Commission (CBRC).

"The non-performing loan (NPL) ratio in Shanghai's commercial housing development loans kept rising in 2009," Yan warned.

According to a report released by Shanghai Yiju E-house R&D Institute, this year's national new commercial residential housing (excluding affordable housing) transaction volume will drop 15 percent compared with 2009, and the figure will be around 30 percent in frontier cities.

The central bank's move to raise bank reserve ratio and the CBRC's warning against credit risks indicated that the credit environment in 2010 will be tightened, and loans to the housing industry will be further restricted, said a bank industry insider.

By People's Daily Online
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