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.

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