SHENZHEN-BASED Ping An Bank Co. said Friday that growth in bad debt at the mid-tier lender may be reaching a plateau due in part to a rebound in the country’s steel and coal industries in the first half of the year.

    The total volume of nonperforming loans (NPLs) at domestic commercial banks hit 1.44 trillion yuan (US$217 billion) as at the end of June, the highest since 2005, showed data Wednesday from the China Banking Regulatory Commission (CBRC).

    But the NPL ratio, or bad debt as a percentage of total loans outstanding, was 1.75 percent, the same as in March.

    “Declining profit growth and rising bad debt” are major challenges for China’s banking sector, Ping An Bank president Shao Ping said in Shenzhen at a briefing on the bank’s first-half earnings.

    “But we are seeing a good sign in that CBRC data showed the rise in bank nonperforming assets was flat in the first half of the year. The situation was the same for our bank.”

    “That wasn’t a coincidence,” Shao said. It signals loan book deterioration is stabilizing, not worsening, he said.

    Late Thursday, the Shenzhen-listed lender said its NPL ratio rose 11 basis points over the first six months of the year to 1.56 percent at the end of June. It also said net profit rose 6.1 percent compared with the same period a year prior.

    Shao said bad debt was stabilizing due to an economic shift toward higher-value goods and services as well as improving performance at traditional industries where the government has been trying to curtail excess capacity.

    “Traditional industries, such as steel and coal, began to make profit this year as demand picked up. That’s good news for banks,” Shao said. (SD-Agencies)