Chinese lenders' bad loan ratio up in Q2, but risk 'controllable'

BEIJING - Chinese lenders saw their bad loan ratio increase to 1.5 percent at the end of June, the country's banking regulator said Monday.

The ratio was 0.11 percentage point higher than it was at the end of March, with the value of outstanding non-performing loans (NPLs) rising 109.4 billion yuan ($17.6 billion) to reach 1.09 trillion yuan, the China Banking Regulatory Commission (CBRC) announced.

An NPL is a loan that is in default or close to being in default.

The CBRC said the commercial banks' credit risk is "generally controllable" and the lenders' overall capability to offset risks remains stable.

The banks' loan loss provisions, or funds set aside to cover potential loan losses, added 83.5 billion yuan to reach 2.17 trillion yuan by the end of June.

The average capital adequacy ratio, the ratio of a bank's capital to its risk-weighted assets, fell 0.18 percentage point to 12.95 percent, but the CBRC said the level was still "relatively high."

As of the end of June, Chinese banks' total assets grew 12.75 percent year on year to reach 188.5 trillion yuan, according to the CBRC.

Outstanding loans to the agricultural sector and small and micro businesses grew 11.5 percent and 15.5 percent year on year respectively, outpacing average loan growth.