This compares to 15.7% a year ago.
The growth of Chinese bank asset slowed from 15.7% to 6.6% in Q1 as lenders are shunning shadow banking activities and turning to conventional lending as Beijing enters another year of deleveraging, according to credit rating agency Moody’s.
Asset growth was weakest amongst midsized joint-stock commercial banks with 3.0% YoY growth in Q1 whilst the assets of city commercial banks grew at a faster pace at 7.9% YoY. China’s entrusted loans contracted 3.5% YTD in the first four months of the year with contribution of entrusted loans to new increase in total social financing (TSF) declining to 5.9% in Q1, according to UOB Kay Hian.
Asset quality is also gradually stabilising as the average non performing loan ratio clocking in at 1.75% in Q1 whilst special mention loans dipped from 3.49% in Q4 to 3.42%.
Capitalisation has also slightly softened, with the average Core Tier 1 capital ratio for all commercial banks down from 10.75% in Q4 to 10.72% in Q1. Pressure on the equity capital position of banks are expected to further ease as asset growth continues to slow down, Moody’s added.
"Looking ahead, we expect the regulators will maintain a cautious approach in order to alleviate any potential disruption to the real economy from the clampdown on shadow banking and interbank activities," says Nicholas Zhu, a Moody's vice president and senior analyst.
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