The cooling off of the housing market and the economic slowdown have led to a sharp increase in bad debts and in the non-performing loan (NPL) ratio.
The bad debts of the China Industry and Commerce Bank hit a record high – the hightest since 2006. In the third quarter, the NPL ratio was 1.06 percent. The NPL amount grew nine percent reaching 115.5 billion yuan. This is the largest increase since 2006.
Quarterly reports of other banks also showed that the NPL ratio and amount have increased since the beginning of 2014. At the end of September, the NPL ratio was 0.99 percent for the China Industrial Bank, 1. 20 percent for China Merchants Bank, and 1.39 percent for China CITIC Bank. The growth rate of the NPL was 0.23 percentage points, 0.30 percentage points and 0.36 percentage points, respectively.
Source: Chinese Business, October 30, 2014