NPL’s Stabilise as Capital Outflow Pressure Diminishes: PBOC

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The vice-governor of China’s central bank has said that non-performing loans have stabilised while capital outflows are on the wane as the country’s economic growth retains momentum.

“Following a long period of ascent, non-performing loans have stabilised in general,” said Yi Gang, PBOC vice-governor, at Bloomberg’s headquarters in New York on Monday, hailing it as a positive development for China’s financial markets. “Overall risk is controllable.”

The NPL ratio of China’s commercial banks dipped for the first time since 2012 in the final quarter of last year, while financial reports released last month by China’s big four state-owned banks saw profits exceed consensus expectations and NPL provisions hold steady.

With respect to capital outflows, Yi Gang said pressure had diminished, but the problem warranted attention from regulators.

The stabilisation of exchange rates capital outflows has helped staunch capital outflows over the past two years, giving more latitude to policymakers, who have spent nearly USD$1 trillion to safeguard the RMB since 2014.

Yi Gang reiterated China’s commitment to stable monetary policy, and said that the country would seek to balance maintenance of economic stability with financial deleveraging and the suppression of asset bubbles.

Yi also committed to strengthening regulation and transparency of China’s shadow banking system, as well as giving close scrutiny to NPL’s, capital outflows and property market trends as part of efforts to control financial risk.

 

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