GRAPPLING with a slowing economy, China’s biggest banks are turning their back on mainstay borrowers like manufacturers and courting high growth industries such as health care, food and IT in a bid to boost revenue.

    The shift in focus by the lenders coincides with a spike in nonperforming loans and slower profit growth as China’s vast factory sector flounders.

    For the first half of this year, the banks reported an increase in bad loans from the Yangtze Delta, China’s main export-focused manufacturing belt, to the Bohai Industrial Rim.

    China’s biggest bank, Industrial and Commercial Bank of China, also said 80 percent of new nonperforming loans in the second quarter came from manufacturing and wholesale.

    Several lenders said they expect bad loans to continue rising this year, especially from creditors in the steel, wholesale and shipping sectors. Agricultural Bank of China, for example, said it had cut loans to customers in steelmaking and shipbuilding by almost 39 billion yuan (US$6.4 billion).

    Loan officers at several banks said they were no longer working on sectors like shipping and commodities, focusing instead on high-growth areas like health and technology.

    Other bankers said they would look to generate more revenue from asset management, trust lending and financial leasing.

    Some banks were also looking to extend loans to domestic clients through their overseas branches to capitalize on higher interest margins.

    “We’ll make our own risk assessments on a case-by-case basis, but health care and high-tech electronics will be a focus,” said a senior Bank of China loan officer. “As lending conditions continue to tighten domestically, we’re also helping our borrowers seek better terms abroad,” he added.

    Bank of China said loans at its overseas branches rose almost 40 percent year on year at the end of the second quarter to 262 billion yuan. (SD-Agencies)