China Bank Bad-Loan Buffers Slip in Sign of Profit Pressures
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Chinese banks’ loan-loss reserves fell to the lowest level against soured debt in three years, signaling a looming drag on profits from the need to set aside more money as delinquencies rise.
The bad-loan coverage ratio fell to 262.9 percent as of June 30 from 273.7 percent three months earlier, the China Banking Regulatory Commission said in a statement today. Nonperforming loans have climbed for almost three years, the longest run since the data began in 2004, to reach 694.4 billion yuan ($113 billion). At the same time, soured debt remains only about 1 percent of total credit.