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Chinese banks' overdue loan portfolio

Research shows the banks' overdue loan ratios have a close correlation with their NPL ratios.

According to Bernstein Research, comparing the overdue loan ratios of the Chinese banks with their NPL ratios, it is found that there is a relatively close correlation across most of the banks. While the difference between the percentage of overdue loans vs. the percentage of non-performing loans vary for CITIC, CMB and ICBC, the rest of the banks see a similar percentage between these two. "We argue that the benign NPL ratios the banks have been reporting can be supported by the low level of overdue loans, given the objectivity of the latter criteria," Bernstein's senior analyst Mike Werner said.

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