RETAIL BANKING | Staff Reporter, China

Bad loan cleanup push Chinese banks profits up 5.1% to $242.03b in 2017

The weighted average NPL ratio dropped from 1.65% in 2016 to 1.55% in 2017.

Chinese banks profit rose at a quicker pace after growing 5.1% YoY to $242.03b (RMB1,309b) in 2017, according to a press release from EY.

An improvement in asset quality ushered in higher earnings for the country’s lenders as the weighted average NPL ratio dropped from 1.65% in 2016 to 1.55% in 2017.

As of end-March, the weighted average NPL ratio of the 29 listed banks dropped even further from 1.55% to 1.52% over the same period. Special mention (SM) loan ratios and overdue loan ratios also exhibited a downward trend in 2017.

Amidst improving asset quality, impairment allowance increased by 7.17% YoY. A separate report also observed that a growing number of high profile and foreign investors have expressed greater interest in acquiring Chinese NPLs as nominal and relative NPL levels within the banking sector clocked in at $254.2b and 1.74% in Q4.

“The growth in the use of debt for equity swaps, non-performing loan (NPL) securitisation and distressed debt management foreign buyers have been increasingly participating in a market that has seen lower levels of activity since the onset of the financial crisis in 2008,” Deloitte noted. 

Do you know more about this story? Contact us anonymously through this link.

Click here to learn about advertising, content sponsorship, events & rountables, custom media solutions, whitepaper writing, sales leads or eDM opportunities with us.

To get a media kit and information on advertising or sponsoring click here.