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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 [1]

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This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam [8]

Senior Market Analyst, UK & EMEA at OANDA [9]
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam
Craig Erlam

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