China state bank NPL ratio nudges higher at end-05

[HenryTo]

Non-performing loans at China's "Big Four" state banks up slightly from 10.1% to 10.5% during the fourth quarter of 2005. Note that this is still a very significantly high number:
----------------------------------------------------------------------------------
China state bank NPL ratio nudges higher at end-05
Fri Jan 27, 2006 04:46 AM ET

BEIJING, Jan 27 (Reuters) - Non-performing loans at China's "Big Four" state banks made up 10.5 percent of their total lending at the end of 2005, edging up from 10.1 percent three months earlier, the banking regulator said on Friday.

Total bad loans at the banks stood at 1.07 trillion yuan ($132.7 billion) the end of 2005, up from 1.02 trillion yuan at the end of September, the China Banking Regulatory Commission said in a statement posted on its Web site (www.cbrc.gov.cn).

The slight rise in the NPL ratio was in contrast to the first half of last year when the ratio fell by more than a third after Industrial and Commercial Bank of China, China's biggest bank, sold 460 billion yuan of bad loans to debt-clearing firms.

Still, the NPL ratio of the "Big Four" -- China Construction Bank Corp. (0939.HK: Quote, Profile, Research) , Bank of China [BOC.UL], Industrial and Commercial Bank of China [ICBC.UL] and Agricultural Bank of China [ABC.UL] -- fell 5.1 percentage points during the whole of 2005.

The government has said measures taken since mid-2003 to slow overheated sectors such as property and steel by limiting access to credit could lead to rising levels of bad loans throughout the banking system.

The banking regulator has said the average NPL ratio for all major Chinese banks fell to 8.9 percent at the end of 2005.

China's rapidly expanding listed banks, including China Merchants Bank (600036.SS: Quote, Profile, Research) and Minsheng Banking Corp. (600016.SS: Quote, Profile, Research) , cut their average bad loan ratio to 4.2 percent at the end of 2005 from 4.51 percent three months earlier, it said.

City commercial banks had an average NPL ratio of 7.7 percent at the end of 2005, down 4 percentage points during the year.

Foreign banks operating in China had an average non-performing loan ratio of 1.1 precent at the end of last year, up slightly from 0.92 percent at the end of September, the regulator said.

China has recapitalised three of the four big state commercial banks since late 2003, allowing them to shift mountains of bad debt to state-asset management companies which are charged with disposing of the impaired assets.

Goldman Sachs (GS.N: Quote, Profile, Research) , Allianz (ALVG.DE: Quote, Profile, Research) and American Express (AXP.N: Quote, Profile, Research) on Friday announced a long-awaited $3.78 billion investment in Industrial and Commercial Bank of China. ($1=8.060 Yuan)