CCB to give up on 2 sectors
(eastday.com)
Updated: 2004-04-11 11:00

China Construction Bank (CCB) plans to cease lending to the catering and entertainment industries to reduce bad loan risks.

Beijing-headquartered CCB, one of China's big-four State-owned commercial lenders, said recently that it will carry out plans to exit the loan business servicing these two sectors because of high defaults rates.

CCB's nonperforming loan ratio on lending extended to the catering industry stood at 39.62 percent at the end of last year, compared with 55.36 percent a year earlier, said the bank.

The situation is even worse on lending given to the entertainment industry.

The NPL ratio in the sector was 60.93 percent last year, compared with 62.65 percent in 2002.

"Though the dud loan ratio in the two sectors was reduced last year, it is still high," said the bank in a statement.

NPL ratio on all loans in CCB has been cut to below 10 percent last year, the lowest among the big-four banks.

Meanwhile, CCB said that it will begin investigations on previous loans offered to the two industries and will extend new lending to catering and entertainment companies which have AAA credit ratings, the highest credit worthiness.

The proportion of catering firms which were granted A, AA or AAA credit ratings was 12.25 percent in Shanghai last year, compared with an average A-plus credit rating proportion of 33.74 percent in all businesses, said the People's Bank of China's Shanghai Branch.

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