Chinese banks saw their bad loans rise in the first quarter due to the slowing down of the world’s second largest economy, but the risks were “under control”, the banking regulator said today.
Guo Ligen, vice chairman of China Banking Regulatory Commission (CBRC) told a financial forum that non-performing loans by banks have been rising as many sectors have felt the pains of the slowing economy.
The increase in bad loans came as China moved to reduce the capacity of oversupplied industries and close “zombie companies”.
The measures are part of a wider push to restructure and upgrade a slowing economy.
By the end of Q1 (Jan-Apr), outstanding loans to five severely oversupplied industries rose only 0.1 per cent from the same period last year, Guo said without specifying the exact amount of the bad loans.
He said the overall risk of the banking industry was “under control,” pledging that the CBRC will improve regulations in line with the new conditions in the macro-economy.
He reaffirmed that banks should boost lending to strategic and emerging industries, and should continue to support oversupplied industries to reduce production capacity.
By the end of Q1, China’s non-performing loan ratio to total loans stood at 1.75 per cent, lower than the international average level.
The capital adequacy ratio of Chinese banks was 13.37 per cent, state-run Xinhua news agency reported.