Chinese Banks’ Outstanding Bad Loans Reach 539.5 Billion Yuan

Chinese banks’ outstanding bad loans stood at 539.5 billion yuan ($88 billion) at the end of June, at a ratio of 0.96 percent, the China Banking Regulatory Commission said.

China’s local government financing vehicles’ combined outstanding loans gained 6.2 percent to total 9.7 trillion yuan at the end of June, according to a statement that was posted on the commission’s website.

Chinese banks’ profits may decline in the next three years as a government crackdown on industrial overcapacity slows lending and sours loans, JPMorgan Securities (Asia Pacific) Ltd. said today. Industrial & Commercial Bank of China Ltd., China Construction Bank Corp., Agricultural Bank of China Ltd., and Bank of China Ltd. were among the world’s five most profitable lenders last year, data compiled by Bloomberg show.

The growth rate of local government financing vehicles outstanding loans was nine percentage points lower than the average loan growth as of the end of June, according to the statement.

CBRC said that it will prevent risks in credit, liquidity, asset management products and trust businesses in the statement.

To contact Bloomberg News staff for this story: Alexandra Ho in Shanghai at aho113@bloomberg.net

To contact the editor responsible for this story: Richard Frost at rfrost4@bloomberg.net

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