NPLs to rise more slowly, no systemic risk seen

Liberalization of interest rates is leading to new business models emphasizing service fees

Chinese banks will continue to see a slight increase in the ratio of nonperforming loans although the rise in bad loans will not lead to systemic risk in the banking sector, analysts said.

"As China has not yet completed restructuring of the real economy, existing loans will inevitably face the pressure of credit risk," said Zeng Gang, director of banking research at the Institute of Finance and Banking under the Chinese Academy of Social Sciences.