Slowing Growth Exposes Chinese Banks’ Debt Debris


China’s economic slowdown is exposing the debt debris in its banking sector. Shaky credits on the balance sheets of the country’s four biggest lenders jumped by 28 percent to 592 billion renminbi ($92.8 billion) in the first half of the year. Further deterioration would send earnings growth into reverse.

Bad debts are already eating into profitability. Increased provisions are the main reason that China’s big four banks reported little or no growth in pretax profit in the first half. Industrial and Commercial Bank of China, China Construction Bank and Bank of China now classify more than 1.4 percent of their loans as nonperforming. Eighteen months ago, the ratio was around 1 percent. At Agricultural Bank of China the ratio jumped to 1.83 percent, from 1.2 percent at the end of 2013…

Slowing Growth Exposes Chinese Banks’ Debt Debris

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