Center

Banks see fewer bad loans

By Yu Lu (China Daily)
Updated: 2006-10-25 09:38

He said that recent rapid growth of mid- and long-term loans for fixed-assets investment projects increased the potential risks to the country's banking industry.

Mid- and long-term loans grew 21.4 per cent in the first nine months of the year to 10.9 trillion yuan (US$1.38 trillion). The growth was 6.8 percentage points higher that that of total lending.

"With both domestic and global economic growth cooling, the problem of excessive liquidity and overcapacity in some industries will persist, meaning those risks to banks may gradually surface," Liu said.

To improve the banks' ability to fend off risks, the regulator has urged banks to raise their capital-adequacy ratios. By the end of September, 55 banks had capital-adequacy ratios of above 8 per cent, two more than at the end of last year.

The banking sector has also diversified its loan structure by offering more credit to small enterprises and to the agricultural sector to improve risk management.

By the end of last month, rural financial institutions' outstanding loans to the agricultural sector rose 20 per cent year-on-year to 1.3 trillion yuan (US$164.6 billion), the CBRC statistics showed.

And the banking regulator's detection of irregularities and illegal activities has made progress in the first nine months of the year.

It uncovered 724 cases of irregularities among domestic lenders, about one-fifth fewer than in the same period last year.