China bad loan risks under control: banking regulator vice chairman

BEIJING (Reuters) - The performance of China’s banking sector this year has been “so far, so good”, Wang Zhaoxing, vice chairman of China’s bank regulator, said on Saturday as banks take aggressive action to control the rise in bad loans.

The volume of NPLs at Chinese banks rose to an 11-year high at the end of June, but the ratio to total loans has stabilized as banks move to write off and transfer bad loans to third-party asset managers.

“The risk of bad loans is very much under control. And banks have increased risk control,” Wang told reporters on the sidelines of the China Development Forum.

“Banks have done a very good job in controlling new bad loan increase and using a number of tools to handle outstanding non-performing loans (NPLs),” said the China Banking Regulatory Commission’s Wang.

“Banks’ business growth, profitability, and asset quality are very stable and non-performing loan situation is promising,” he said.

China’s five biggest listed lenders are due to report their 2016 results later this month.

Wang said banks are being prudent with individual home mortgage lending in cities where prices are rising rapidly, but that credit needs to be available in smaller cities with a large inventory of unsold homes.

Mortgage lending has increased rapidly over the last year as home prices have risen at near record levels, with speculative purchases rising and the government taking measures to cool off the market.

“For speculative housing investment, we don’t give (credit) support,” Wang said.

Reporting by Shu Zhang and Elias Glenn; Editing by Hugh Lawson