China's Shandong province bad loans surge 26 pct in H1 - paper

BEIJING, July 24 Wed Jul 23, 2014 10:23pm EDT

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BEIJING, July 24 (Reuters) - The amount of bad bank loans in China's eastern Shandong province surged 25.8 percent between January and June this year, the official Financial News reported on Thursday.

Financial institutions in the province had outstanding non-performing loans (NPLs) of 81.5 billion yuan ($13.2 billion) at the end of June, up by 16.7 billion yuan from the start of 2014, the newspaper said.

The NPL ratio hit 1.57 percent at the end of June, up 0.22 percentage points for the beginning of the year, according to the paper, which is run by the central bank.

The rise in soured bank loans in the province was fuelled by slower economic growth and the government's efforts to deal with industries with excess capacity, the newspaper said.

Shandong's annual economic growth slowed to 8.7 percent in the first quarter, down from as high as 15.2 percent in the first quarter of 2010, it added.

Wang Yong, head of the Banking Reform and Development Research Centre, was quoted saying bad loan woes were spreading from the Yangtze River Delta, which covers the financial capital of Shanghai and the eastern provinces of Zhejiang and Jiangsu, and Pearl River Delta in Guangdong to inland provinces.

China's Yangtze River Delta region, a key economic powerhouse in the past three decades, has become the epicenter for bad loans as the economy slows.

($1 = 6.1982 Chinese yuan) (Reporting by Kevin Yao; Editing by Jacqueline Wong)

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