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China major banks see bad loans decline
(AP)
Updated: 2006-01-18 15:23
Nonperforming loans at China's major commercial banks fell by 498.5 billion
yuan (US$61.8 billion; euro51 billion) in 2005, reducing their share of total
lending by 4 percentage points, the official Xinhua News Agency reported
Wednesday.
The report, citing an unnamed official at the China Banking Regulatory
Commission, comes as efforts step up to restructure state-owned lenders ahead of
a full opening of China's financial services markets to foreign competition at
the end of this year.
Major banks, as defined by the banking regulator, include both state-owned
and joint stockholding banks, but exclude credit cooperatives -- known to have
much high portfolios of bad debts, and foreign banks, the report said.
The report did not provide total dollar figures for the amount of
nonperforming loans or total loans at major banks. According to earlier-released
data from the commission, by the end of 2004, the banks had total nonperforming
loans worth 1.718 trillion yuan (US$212.9 billion; euro177 billion), accounting
for 13.21 percent of total lending.
International analysts have put the actual amount of irrecoverable loans at a
much higher level, although massive state-financed write-offs and bailouts have
helped to trim them from their peak a few years ago of as much as half of all
lending.
Total assets in China's banking system reached 37 trillion yuan (US$4.6
trillion; euro3.8 trillion) by the end of 2005, up 18.4 percent from a year
earlier, the report said without providing comparative figures.
The report said 40 banks had met the regulator's capital adequacy ratio
requirement of 8 percent by the year's end, an increase of 10 from the end of
2004.
On Tuesday, the Agricultural Bank of China, the third-largest but weakest of
the country's four big state-owned commercial banks, said it hopes to finish
restructuring this year but has yet to receive a government decision on a
bailout.
The government has spent a total US$60 billion (euro50 billion) to replenish
capital at the other big state banks -- the Bank of China, Industrial and
Commercial Bank of China and China Construction Bank.
"We have gotten in line, we're the last and still waiting for a decision,"
Han Zhongqi, vice president of the Agricultural Bank, told reporters. "The
restructuring won't be as fast as the other banks and our problems are larger."
The Agricultural Bank was set up to lend to rural projects and businesses and
thus has a wider exposure to bad debts, with its nonperforming loan ratio at 26
percent of total lending at the end of 2005, down just 0.51 percentage point
from the beginning of the year.
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