NPLs up for four consecutive quarters.
This is the the longest period of asset-quality deterioration for Chinese banks since authorities began to release such figures in 2004.
The China Banking Regulatory Commission showed soured loans rising by 22.4 billion yuan or $3.6 billion from July to September, to 478.8 billion yuan.
All types of banks saw an increase in bad loans, including the major State-owned lenders, joint-stock banks, rural banks and foreign banks.
"It was predictable since last year that both bad loans and the NPL ratio would jump in 2012 on slower economic growth, and banks set aside enough provision to cover bad loans," said Guo Tianyong, banking research director at the Central University of Finance and Economics.
The NPL ratio against total outstanding loans stood at 0.95 percent by the end of September, up by 0.01 percentage point from three months earlier.
Liu Yuhui, director of the financial lab at the Chinese Academy of Social Sciences, said it is hard to measure how big the risks are, given that banks still have great flexibility when classifying loans. Thus, the figures might not be reliable.
Wang Kang, general manager for financial planning at China Citic Bank, said bad loans among lenders would continue to rise, as some small and medium-sized enterprises continue to face challenges amid an uncertain economic rebound.
Media reports in October said banks are reviewing their loans to industries such as manufacturing, wholesale and retail, property, construction, transportation, electricity and gas, and water supply.
Do you know more about this story? Contact us anonymously through this link.