China's Big Banks in 2016: Another Challenging Year on Bad Loans
- Earnings growth may remain sluggish for the big-five banks
- Asset quality to deteriorate as China cleans up `zombie firms'
Lower interest rates, rising bad loans and a growing challenge from Internet finance companies will add up to another tough year for China’s biggest banks in 2016, with their profit growth set to pick up only marginally from the slowest pace in more than a decade in 2015. Here are five snapshots.
No end is in sight for increases in nonperforming loans. Going by the official numbers, which are widely regarded as understated, bad loans rose to a seven-year high of 1.2 trillion yuan ($184 billion) as of the end of September. In a sign of the write-offs to come, policy makers are aiming for a clean-up of “zombie companies” that rely on government subsidies and bank loans to keep operating. Xuanlai He, an analyst at Commerzbank AG, is among those forecasting a worsening of asset quality in 2016.