China’s Overall Bad-Loan Ratio Rose to 1.76% in Third Quarter

  • Increase shown in data released by banking regulator
  • Industry’s loan-loss provision ratio slipped in third quarter

China’s bad-loan ratio edged up in the third quarter, data from the banking regulator showed.

Nonperforming loans accounted for 1.76 percent of total advances as of Sept. 30, compared with 1.75 percent at the end of June, the China Banking Regulatory Commission said on Thursday. Including at-risk or “special-mention” loans, troubled credit totaled 5 trillion yuan ($736 billion).

The increase came after the ratio stayed flat in the second quarter.

The official bad-loan numbers are regarded by analysts as understated, as lenders roll over credit for state-owned enterprises that lack the ability to repay. Loan-loss provisions -- the industry’s buffer against future bad debt -- fell to 175.5 percent of existing bad debt from 176 percent three months earlier.

Other key industry data from the statement:

  • Banks’ combined profits rose 2.8 percent from a year earlier to 1.3 trillion yuan in the first nine months
  • The capital adequacy ratio for the industry stood at 13.31 percent from 13.11 percent in June

— With assistance by Jun Luo

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