Follow: Hisham Mukhana
China’s long-running real estate downturn has eroded the balance sheets of the country’s largest state banks, with their bad loans on the rise.
The Bank of Communications reported, on Wednesday, that the percentage of bad real estate loans jumped to 4.99%, at the end of last year 2023, from 2.8% in the previous year. While the stock of delinquent mortgage loans decreased, non-performing private loans for this sector jumped 23% to 9.88 billion yuan ($1.4 billion).
The biggest competitor, the Industrial and Commercial Bank of China, saw its bad loans from residential mortgages rise 9.6% to 27.8 billion yuan. The percentage of non-performing real estate loans for companies was the highest among all sectors. Both banks reported small profit gains, with interest margins narrowing, and their shares fell by 2.6% and 1%, respectively.
It is noteworthy that the consolidated profits of Chinese commercial banks rose by 3.2% to 2.38 trillion yuan last year, which is the slowest pace since 2020, according to official data. Non-performing loans also rose to a record high of 3.23 trillion yuan ($447 billion).
These results shed light on the performance of China’s largest state banks last year, which Beijing assigned the duty of helping to support the local economy and rescue debt-burdened real estate developers and local governments. At a time when the slowdown in the economy has put downward pressure on interest rates. Indeed, these banks have so far responded to Beijing’s call to lower lending rates and increase financing support for developers.
The Bank of Communications said China’s previous cuts to key loan interest rates and reductions in outstanding mortgage interest rates had hurt profit margins. With them.
2024-03-30 20:21:29
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