Bad loans at China’s biggest banks rose at the fastest pace in at least seven years during the third quarter as a slowing economy squeezed corporate borrowers. Analysts said the fall in asset quality was manageable.
Industrial & Commercial Bank of China and China Construction Bank, the country’s two biggest banks by assets, reported their biggest quarterly jump in bad loans in at least seven years, with rises of 9 and 10 per cent respectively.
Analysts warned against misinterpreting the rise at the two banks. “The market might be over-concerned with ICBC and CCB’s nonperforming loans,” said Dorris Chen, China financial institutions analyst at Standard Chartered. “NPLs rose because these banks are reluctant to sell them to distressed asset managers. It doesn’t indicate a bigger underlying problem with asset quality.”