THE asset quality of most Chinese banks has improved in the first half of the year, which was evident in their dropping nonperforming loan (NPL) ratio.

The NPL ratio of six major State-owned banks has declined in the first half of the year, with that of Postal Savings Bank of China (PSBC) being the lowest at 0.83 percent. Bank of China reported the most decline in NPL ratio, down 0.16 percentage points from the end of last year.

Besides State-owned lenders, many joint-stock banks, city-based commercial banks and rural commercial banks also saw improving asset quality. For example, the NPL ratio of China Merchants Bank was 1.01 percent at the end of June, and that of Bank of Ningbo was 0.79 percent, both at a low level.

The improving asset quality is attributable to the lenders' restructuring efforts and risk management.

The financing demand of enterprises has climbed since the beginning of the year as the economy has sustained recovery from COVID-19. To meet the demand, many banks have channeled credit to key industries, regions, sectors, as well as high-quality customers. This could help prevent financial risks and serve the real economy.

Industrial and Commercial Bank of China (ICBC), China's biggest commercial lender, said its NPL ratio stood at 1.54 percent at the end of June, down 0.04 percentage points from the end of 2020.

In the first half of this year, Bank of Communications dealt with 43.72 billion yuan (US$6.77 billion) of NPLs, up about 20 percent year on year. ICBC dealt with NPLs totaling 84.4 billion yuan and China Construction Bank disposed of NPLs worth 87 billion yuan, a record high for the bank.

Many banks have increased their provision coverage, indicating improving capacity to fend off risks.(Xinhua)