What are the holdings of non-performing loans at China’s largest banks?

At the end of 2015, Agricultural Bank of China was sitting on more non-performing loans (NPLs) than any of its large peers (see chart), 2.39%. Moreover, it has also seen the largest increase in NPLs over the course of 2015, 0.85 percentage points.

 

Chart

The other three big Chinese banks – Industrial Commercial Bank of China (ICBC), Bank of China and China Construction Bank (CCB) – managed to keep their NPLs at about 1.5%. Over the past few years, the stock of bad loans has been steadily rising in China. At the end of 2015, it reached Rmb1270bn, a 10-year high according to the China Banking Regulatory Commission.

For the top four largest lenders in China, NPLs as a share of the loan portfolio has actually declined steadily since a peak in the mid-2000s. The trend bottomed out in 2012, and since then there has been a steady uptick in bad loans each year. NPLs at the top banks are still a far cry from 2006 levels. The stock of NPLs was 23.43% at the Agricultural Bank of China in 2006, as opposed to 2.39% in 2015, and for the other three banks, NPLs in 2006 were approximately twice the amount they were last year.

Another category of loans that grew in 2014 are the special-mention loans, which are loans overdue for less than 90 days and so which are of concern but not yet considered impaired. This particular category is highest at ICBC, at 4.36%. The bank has also seen a much higher increase in this group of questionable loans than any of its peers in the last year – 1.46 percentage points.

Agricultural Bank of China plays the host to the second largest amount of special-mentions loans, where they amount to 4.2% of the loanbook. However, they have been rising more slowly there than at ICBC – increasing in the last quarter by 0.36 percentage points. They do not seem to be as much of a problem at the two other banks, as their share of the loanbook inched up 0.14 percentage points to 2.51% at the Bank of China and actually decreased by 8 percentage points at the China Construction Bank, to 2.89%. 

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