China Banks NPL Ratio Forecast Raised at Credit Suisse

(Corrects forecast in first paragraph.)

Credit Suisse Group AG raised its forecast for Chinese banks’ non-performing loan ratio to 8-12 percent of loans in the “next few years” from 4.5-5 percent earlier.

Real estate, manufacturing, local government and small- medium enterprises are the “four main sources of risk,” Credit Suisse analysts led by Sanjay Jain wrote in a report dated today. The four account for about 55 percent of the loan book and are expected to contribute “more than” 80 percent of potential NPLs, the analysts wrote. “The NPLs would work out to 65–100 percent of banks’ equity,” they wrote.

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