Exposure of Listed Lenders to Property Sector Exceeds 20 Trillion Yuan


The total value of housing-related loans made by 25 of China’s A-share banks is reportedly in excess of 20 trillion yuan (USD$2.9 trillion).

China Securities Journal reports that home loans by 25 Chinese A-share banks increased by 25.24% year-on-year in 2016, rising from 16.35 trillion yuan to 20.47 trillion yuan.

Industry observers point to the huge amount of credit extended by China’s big lenders to home buyers as a major tailwind for property prices last year.

Home mortgage loans surged in 2016

Home mortgage loans by 25 listed Chinese banks skyrocketed last year, surging 4.19 trillion yuan compared to the end of 2015 to hit 16.15 trillion yuan in total, for year-on-year growth of 35%.

Growth remained strong throughout the year despite curbs introduced by policymakers, flagging only moderately in the second half.

Home mortgage loans comprise over 20% of all lending by China’s big-four banks (Agricultural Bank of China, Bank of China, China Construction Bank and Industrial and Commercial Bank of China).

CCB and ICBC remain the biggest suppliers of home mortgage loans to borrowers, with balances of 3.63 trillion yuan and 3.24 trillion yuan respectively.

Banks expect home lending to remain strong in 2017, with the vice-president of one joint-stock bank telling China Securities Journal that personal home loans are likely to retain their growth momentum this year.

Banks dial back on lending to developers

In sharp contrast to home mortgage the loans, majority of Chinese banks curbed lending to developers in 2016.

The balance of loans to developers by listed banks saw a modest fall last year, declining from 4.39 trillion yuan at the end of 2015 to 4.32 trillion yuan by the close of 2016.

14 out of 25 A-share banks reduced both the scale and percentage of their loans to developers, with cut backs in lending particularly pronounced in the second half of 2016, while only 11 posted gains in the absolute value of such loans compared to 2015.

Bank of China remains the biggest lender to property developers, with a loan balance of 751 billion yuan by the end of 2016, which is equal to 7.53% of the total sum of loans and advances.

This figure nonetheless represents an 8.17% decline compared to 2015, due to pronounced cut back on the issuance of development loans in the second half of last year.

NPL ratio for property-related lending reportedly maxes out at 2.53%

The official financial data provided by listed banks for their property-related lending in 2016 indicate moderately high NPL ratios.

ABC, CCB and ICBC have all posted NPL ratios of between 2 and 2.53% for their loans to property developers.

China’s joint-stock banks posted better NPL ratios for developer loans than the big state-owned banks, with some of them hovering at around 1%. China CITIC Bank had the lowest NPL ratio at 0.05%.

NPL ratios for home mortgage loans were also reportedly low, with China Merchants Bank and Agricultural Bank of China posting figures of 0.42% and 0.43% respectively.