China bank NPLs rise 11% in second quarter: regulator

[BEIJING] The amount of bad loans in China's commercial banking sector increased by 11 per cent in the second quarter of the year, the country's banking regulator said on Monday, as a slowing economy continued to weigh on lenders.

Commercial bank non-performing loans (NPLs) at the end of June amounted to 1.09 trillion yuan (US$175.53 billion), up 109.4 billion yuan from the end of the first quarter, the China Banking Regulatory Commission (CBRC) said in a statement.

The average non-performing loan ratio of China's commercial banks rose by 0.11 per centage points in the second quarter to 1.5 per cent at end of June, the regulator said.

Chinese banks' tier-one core capital adequacy ratio stood at 10.48 per cent at the end of June, down 0.18 per centage points from the end of March, the CBRC said.

China's big commercial banks are setting aside more cash as they prepare for more loans turning sour. Loan loss reserves at the end of the second quarter amounted to 2.17 trillion yuan, an increase of 83.5 billion yuan over the end of the first quarter.

Commercial bank loan loss provision coverage amounted to 198.39 per cent, a decline of 13.59 percentage points from the earlier quarter.

NPLs for the entire banking sector rose to 1.8 trillion yuan as of the end of June, up 35.7 per cent from a year prior, according to the transcript of an internal speech delivered last month by CBRC Chairman Shang Fulin.

The regulator, in its statement, also said the banking sector was increasing its lending to small and micro enterprises. Small and micro enterprise outstanding loans amounted to 22 trillion yuan, an increase of 15.5 per cent over the same period a year earlier.

The CBRC has been urging China's commercial banks to increase lending to riskier small business and the rural sector.

REUTERS