CCB confident of managing property sector's lending risks

The asset quality of China Construction Bank Corp in terms of loans to the real estate sector remained relatively stable, with the overall risk associated with lending to the sector being under control, said a senior executive of the large State-owned commercial lender on Wednesday.

The Chinese real estate sector faced stress in the first half of this year due to a resurgence of COVID-19 cases in some areas and downward pressure on the economy. This led to an increase in the nonperforming loan ratio of the CCB's lending to the property sector over this period, said Cheng Yuanguo, chief risk officer at the bank.

As of the end of June, the balance of its loans to the real estate sector amounted to 762.79 billion yuan ($110.65 billion), and the NPL ratio was 2.98 percent, up 1.13 percentage points from the end of last year. The balance of its residential mortgages reached 6.48 trillion yuan, and the NPL ratio increased by 0.05 percentage points to 0.25 percent, according to the bank's 2022 interim results announcement.

In spite of the rise in housing-related NPL ratios, the overall risk of the CCB's lending to the real estate sector and homebuyers still remains controllable and the allowances for impairment losses on loans are sufficient, Cheng said.

"We kept optimizing the bank's credit structure, allocating more resources to the key fields and weak links of the economy while reducing the issuance of credit to the real estate sector. The bank also pressed ahead with a house rental strategy, allocating more credit resources to rental housing projects," he said.

At the end of June, the balance of its loans for the house rental business was 180.62 billion yuan, up more than 35 percent from the end of last year.

In addition, the bank continuously optimized the structure of corporate clients in the real estate sector, the structure of regions where properties are located, and the structure of housing-related loan products, Cheng said.

"Recently, the government launched a series of measures, which we believe will have a positive impact on stabilizing the housing market and restoring market confidence," he said.

The CCB will continue to stabilize the supply of credit to the real estate sector, better meet the rigid and upgraded demand for housing, and keep stepping up support for government-subsidized rental housing. It will also provide financial services for mergers and acquisitions of housing projects in a steady and orderly manner, monitor risks at real estate developers by giving full play to intelligent risk management instruments, and tighten supervision over the use of presold property proceeds, he said.

jiangxueqing@chinadaily.com.cn