THE bad debt ratio of Chinese banks climbed to a five-year high as of the end of 2014 amid rising financial pressure as China’s economy cools, the banking regulator said yesterday.
The non-performing loan ratio for Chinese banking institutions, including policy banks and rural credit organizations, increased to 1.64 percent in the fourth quarter, up from 1.49 percent at the end of 2013, according to the China Banking Regulatory Commission yesterday.
That was the highest since the NPL ratio hit 1.66 percent in the third quarter of 2009.
The NPL ratio for Chinese commercial banks rose for 13 consecutive quarters to 1.29 percent, the CBRC data showed.
Wang Zhaoxing, deputy head of CBRC, said at a press conference yesterday in Beijing that companies are facing increasing financial risks as the Chinese economy cools.
This increases pressure on asset quality of banks, Wang added.
The financial risks may cause financial instability but Wang said the risks are under control as banks still have abundant capital to cover potential losses.
The bank capital adequacy ratio, a measure of the level of protection offered to depositors, stood at 12.9 percent at the end of November, an increase of 0.75 percentage point from November 2013.
The CBRC Shanghai branch said on Thursday that the NPL ratio for banks in the city was 0.89 percent as of the end of last year, below the national level.