Liu Minxia

    mllmx@msn.com

    DEMONSTRATING the impact of China’s economic slowdown, the country’s top 10 listed banks are exhibiting a clear downward trend in terms of the quality of their credit assets, with increases in nonperforming loans (NPLs) and NPL ratios being observed across the board, PricewaterhouseCoopers (PwC) said in a report released Tuesday.

    The total bad loans of these banks, including China’s four major State-owned banks as well as China Merchants Bank and China Minsheng Banking Corp., rose to 448.4 billion yuan (US$73 billion) at the end of last year, up 19.47 percent from a year ago, the report said.

    Their average NPL ratio rose to 0.99 percent, as the bad loan ratio of all Chinese banks hit a two-year high at the end of 2013. Official data released last week showed China’s economy growing at its slowest pace in 18 months.

    PwC expects the soured loans of these banks to continue to grow in the near future as their delinquency ratio grew faster than their bad loan ratio last year.

    China Huarong Asset Management Co., China’s largest manager of soured debt, echoed the PwC report, warning last week that China’s bad-loan ratio rose “significantly” in the first quarter, which increases risks for the nation’s banking industry.

    The business environment this year has been “grim and complicated” as banks face pressures on asset quality, liquidity and lending margins, Huarong chairman Lai Xiaomin said.

    China’s slowing economy has made it tougher for borrowers to repay debt, driving up banks’ soured loans for a ninth straight quarter as of December to their highest level since 2008, data from the banking regulator show. New nonperforming loans amounted to more than 60 billion yuan in the first two months of this year, compared with 100 billion yuan for all of 2013, China Business News reported earlier this month, quoting unidentified sources.

    Regulators published detailed rules on commercial bank issuance of preferred shares Friday, paving the way for lenders to begin fundraising designed to enable them to withstand an expected rise in bad loans.

    Financial market diversification and liquidity management should become focus areas of the big banks, the PwC report warned.