South China Morning Post (April 2)
Banks and regulators in China have engaged in a delicate dance between reducing non-performing loans (NPLs) and maintaining profits. “That’s why the NPL ratios of the nation’s key banks all hover at about the same level–now around 1.7 per cent of loans,” though “Fitch estimates that the real ratio could be as high as 20 per cent, implying total NPLs of 19 trillion yuan (US$3 trillion).” But the regulator is now becoming more demanding in NPL reduction and unforgiving of gimmicks previously employed to hide NPLs. “Given Beijing’s focus on the stability of the financial system, the flow of NPLs into the market should pick up considerably in the next two to three years, providing ample opportunity for new investors.”
Tags: Banks, China, Fitch, Gimmicks, Investors, Market, NPLs, Opportunity, Profits, Regulators
