Bad loan growth adds to pressures

Mounting bad loan levels are set to add more pressure to Chinese lenders during the second half of the year, experts said.

The average nonperforming loan ratio of the banking sector is expected to reach 1.6 to 1.8 percent for the year, compared with 1.5 percent at the end of June.

As of June 30, Agricultural Bank of China Ltd posted the highest NPL ratio of 1.83 percent among the four largest State-owned banks, up 29 basis points from the end of last year. The NPL ratios of the other three banks increased by more than 20 basis points to around 1.4 percent.

During the first six months of this year, Industrial and Commercial Bank of China Ltd, the nation's largest lender by assets, had a 37 percent increase in overdue loans and a 31 percent increase in special-mention loans.

Although nonperforming loans are on the rise, Zeng Gang, a research fellow at the Chinese Academy of Social Sciences' Institute of Finance and Banking, said they are reasonable losses for banks because the corporate credit conditions are decided by the macroeconomy, which still remains sluggish.

"The current NPL ratios are within a controllable range," Zeng said.