12/26/2013 | 01:26am US/Eastern
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BEIJING–China’s banks are grappling with a surge of bad loans from three key sectors, led by the wholesale and retail sector, according to a study by a government think tank.
Non-performing loans in the wholesale and retail sector reached 2.6% — far above the banking industry average in 2013 — with information technology following at 2.0% and manufacturing at 1.8%, according to a study by the Chinese Academy of Social Sciences and reported by the China Daily on Thursday.
The non-performing loan ratio of China’s banking sector stood at 0.97% as of the end of the third quarter, according to data previously published by the nation’s banking regulator.
Outstanding bad loans increased by 24.1 billion yuan ($3.95 billion) in the third quarter to CNY563.6 billion as of the end of September, official data showed.
The latest surge in non-performing loans was due to the economic slowdown, the China Daily cited Yang Zaiping, executive vice president of the China Banking Association, as saying.
Mr. Yang was also quoted as saying that non-performing loans will rise in some sectors next year as a result of efforts to cut excess production capacity and curb debts of local government financing vehicles.
He added, however, that Chinese banks can handle a bad loan ratio of up to 3%.
Write to Grace Zhu at grace.zhu@dowjones.com
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China Banks See Bad Loan Surge, Report Says – 4-traders (press release)
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