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Six Major Chinese Banks See Significant Decline in Mortgage Loans

Well-known Chinese news site Sina (NASDAQ: SINA) recently reported that, amid the “shock waves” of the real estate market downturn and early mortgage repayments, Chinese banks’ personal mortgage businesses continue to face pressure. By the end of 2023, the total mortgage loan balance of the six major state-owned banks was approximately RMB 26 trillion yuan (around US$3.66 trillion), a decrease of approximately RMB 500 billion yuan (around US$70.34 billion) from the end of the previous year.

Among the six major state-owned banks, the balance of personal housing loans of the five largest banks all decreased year-over-year. Only one of the six largest banks — the Postal Savings Bank of China — saw an increase. In terms of asset quality, five of the six major banks had suffered a year-over-year increase in non-performing mortgage loan ratios by the end of 2023. The Chinese central bank’s “Statistical Report on Loan Investment by Financial Institutions in 2023” showed that the balance of personal housing loans at the end of 2023 suffered an overall year-over-year decrease of 1.6 percent.

In response to the significant decrease in mortgage loans on their books, most banks have been intensifying their efforts to issue new mortgage loans. That being said, increasing early mortgage repayments in 2023 brought further pressure on outstanding mortgage loans and banks’ loan yields.

Source: Sina, April 8, 2024