Bad loans to jump in Q3: economists

Updated: 2012-10-10 16:04

By Wang Xiaotian (chinadaily.com.cn)

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The third quarter is likely to see a jump in bad loans among commercial lenders, as overdue loans continue to rise amid the softening economic growth, analysts said.

From July to September, special-mention loans and overdue loans - which are indicators of future non-performing loans - are all set to increase, said E Yongjian, an analyst at the Bank of Communications Co Ltd.

In the first half, overdue loans among listed banks reached 528.4 billion yuan ($83.48 billion), up 31.3 percent from the beginning of the year.

Some joint-stock lenders such as China Citic Bank Corp, Shanghai Pudong Development Bank Co Ltd, and China Minsheng Banking Corp Ltd saw an increase of more than 50 percent in overdue loans.

About 80 percent of loans overdue at the end of June are likely to turn sour, Mao Junhua, a banking analyst at China International Capital Co Ltd, was cited by the Guangzhou Daily as saying.

The newspaper said that some banks in Guangdong province have admitted that overdue loans are increasing, and that they've strengthened probes into high-risk loans.

Concerns over deteriorating asset quality are rising.

Lenders extended record-high new yuan loans last month compared with any previous August as the government seeks financial support for new rounds of investment projects to spur economic growth.

Although overdue loans are increasing at a rapid pace, it's hard to say how many of such loans will end up turning sour, said Margarita Ho, a partner at PwC China Financial Services.

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