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Chinese banks still see NPLs rise in Q3

By Feng Jianmin (Shanghai Daily)

08:16, November 16, 2012

CHINESE banks suffered the longest streak of bad loans worsening for the fourth consecutive quarter since data were released in 2004, increasing pressure on asset quality as the economy cooled.

Non-performing loans rose by 22.4 billion yuan (US$3.6 billion) in the three months ended on September 30 to 478.8 billion yuan, the China Banking Regulatory Commission said on its website yesterday.

The proportion of bad loans among all banks edged up 0.01 percentage point during the same period to 0.95 percent, the CBRC said.

All types of financial institutions, including the largest state-owned lenders, rural banks and foreign banks, saw a rise in bad loans while the bad loan ratio for large commercial banks dipped 0.01 percentage point to 1 percent, it said.

"There is pressure on banks' asset quality, and bad loans may still increase in the fourth quarter," said Janet Sun, an analyst of UBS Securities.

However, Chinese banking industry leaders said the current bad loan ratio is still relatively safe although banks have been grappling with rising defaults and weaker loan demand after economic growth slowed for a seventh quarter.

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