Real Estate Defaults Lead to China Merchant Bank’s First Rise in Non-Performing Loans in Five Years


One of China’s joint-stock lenders has highlighted the strong concentration of real estate and credit card lending in its risk assets following the first rise in NPL’s in five years.

At a general shareholders meeting held on 29 June Wang Liang (王良), president of China Merchants Bank (CMB), said that as of the end of the first quarter its non-performing loan (NPL) balance was 54.1 billion yuan, for an on-quarter rise of 3.3 billion yuan. CMB’s NPL ratio was 0.94%, for a rise of 0.03% compared to the end of the quarter.

The figures bring an end to five consecutive years of decline in the NPL balance as well as NPL ratio for CMB.

According to Wang most of CMB’s risk assets are in the areas of real estate and credit card or consumption-related lending, with real estate risk mainly consisting of individual defaults.

“Our bank’s NPL balance and NPL ratios may have seen slight rises, but the rises are still very small, and the NPL ratio is still at a comparatively low level,” said Wang.