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Chinese Banks’ Bad Loan Ratios Shrink as Defaults Averted

China’s largest banks posted a decline in bad-loan ratios for 2012 amid the slowest economic expansion in 13 years, signaling policy makers may have averted a surge in defaults.

The gauge shrank to 1.33 percent at Agricultural Bank of China Ltd., the nation’s third-largest by market value, from 1.55 percent in 2011, while net income increased by 19 percent, the Beijing-based lender said yesterday. At Bank of China Ltd., the fourth-largest, non-performing loans dropped to 0.95 percent of the total from 1 percent, and profit climbed 12 percent.