By the end of the third quarter of 2025, Chinese commercial banks reported a total of 3.5 trillion yuan (US$490 billion) in non-performing loans (NPLs), an increase of 88.3 billion yuan from the previous quarter. The NPL ratio rose to 1.52 percent, up 0.03 percentage points. Profitability has also continued to weaken: in the first three quarters, the sector’s average return on equity fell to 8.18 percent from 8.77 percent in 2024, while return on assets declined from 0.68 percent to 0.63 percent.
Distressed-loan transfer announcements—banks selling off bad-loan portfolios—have surged to 1,166 so far this year, far exceeding the four-year annual average of about 680. On November 14 alone, eight banks disclosed transfers totaling more than 8.5 billion yuan, mostly involving long-overdue loans, many delinquent for over five years. Some asset packages are extremely large, reaching into the tens or even hundreds of billions. In one case, a bank transferred a portfolio with a principal balance of about 500 billion yuan, which ballooned to nearly 700 billion yuan after including interest and penalties.
The liquidation wave now extends beyond loan portfolios. Banks across China—including major state-owned lenders—are directly selling foreclosed real estate, alcohol inventories, and even small tradable goods, rather than relying on court-organized auctions. Many of these assets are being listed at steep discounts, in some cases just 25–30 percent of market value. For example, a property in Guangzhou that previously sold for over 2.2 million yuan was recently listed for under 800,000 yuan. Yet even with heavy markdowns, many properties still struggle to attract buyers, underscoring the depth of the current demand slump.
Source: Epoch Times, November 15, 2025
https://www.epochtimes.com/b5/25/11/14/n14636104.htm