Lending Spree Could Pose Risks for Banks in China, Warns Regulator

Mainland banks may face a bad-loan problem in the long run if most of their loans are granted to sectors such as infrastructure and real estate, reports the South China Morning Post, citing a senior banking regulator.

 

Quoting Wang Huaqing, the disciplinary secretary of the China Banking Regulatory Commission, the Post says that more than two-thirds of new loans by the mainland's 19 largest banks in the first 10 months of this year were given to large customers whose credit lines were worth at least 50 million yuan (HK$56.78 million).

 

"Credit growth of this magnitude inevitably places a strain on banks' internal risk management and raises concerns about a future deterioration in loan quality," Charlene Chu, an analyst at Fitch Ratings, told the Post.

Suggested Articles

Some of you might have already been aware of the news that Questex—with the aim to focus on event business—will shut down permanently all media brands in Asia…

Some advice for transitioning into an advisory role

Global risks are intensifying but the collective will to tackle them appears to be lacking. Check out this report for areas of concern