China’s Big Five Banks Write Off Billions in Bad Debts

China’s big five banks are losing money from writing off bad debt at a rate faster than they have been able to earn profits or raise capital this year, diminishing hopes that the industry could start to put the worst of China debt problem behind it next year while the non-performing loan (NPL) ratio is still climbing.

Led by the Agricultural Bank of China, which set the industry record for worst NPL ratio of 2.39 per cent, the average NPL ratio at the national “big five” has climbed back to 1.72 per cent, up from 1.69 per cent recorded by the China Banking Regulatory Commission at the end of June. The increase follows a brief hiatus from what seemed to be an improvement from earlier figures.

Total losses from bad assets at the big five amounted to 273.7 billion yuan ($40 billion) in the nine months ended September, versus the 776.9 billion in net profits and 1.8 trillion yuan in new capital they raised mostly through bond and rights issues so far in 2016.

CNBC

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Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.