Bad loans up, asset quality down for big Chinese banks

Fourteen of 16 banks report rise in bad loans.

The asset quality of major Chinese banks continued to worsen in the first quarter as the Chinese economy weakened further, according to the financial reports of major banks.

Outstanding loans of 16 listed banks came to US$68.8 billion in March, with 14 banks reporting a rise in bad loans,. New non-performing loans (NPLs) hit US$3.6 billion from January to March.

Ten out of 16 listed banks witnessed a rise in both outstanding NPLs and NPL ratios. China Citic Bank reported the biggest jump in its bad loan ratio, which rose by 0.14 percentage point from three months earlier.

Only two lenders reported a drop in both bad loans and NPL ratios. Agricultural Bank of China's bad loans fell by US$23.7 million from the end of 2012 or 1.27% of the total loans, while the Bank of Beijing saw a US$21 million, accounting for 0.54% of total loans.

Analysts believe the rise in NPLs was mainly because economic growth lacked momentum, and a less optimistic scenario has affected companies' operations, which led to more defaults.

They noted, however, that the scale of the increase in bad loans was mild and might fall in the coming months as the economy stabilizes.