China’s Big State-owned Banks Downplay Impact of Construction Delays on Mortgage Repayments

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China’s big state-owned banks have made a succession of officials statements seeking to reassure markets about the impact of the refusal of some borrowers to make repayments on their mortgages due to construction project delays and real estate risks.

Bank of Communications (BOCOM) announced on 14 July that as of the end of June its domestic mortgage balance was nearly 1.5 trillion yuan and that overall asset quality was stable, with only around 100 million yuan affected by real estate project risk.

“Some real estate enterprises have recently succumbed to risk, leading to work suspensions in certain cities and delays on payments,” BOCOM said.

“The balance of our mortgages in arrears involving risky real estate projects as revealed by media reports is approximately 99.8 million yuan, accounting for just 0.0067% of our domestic mortgage balance.

“The scale and share are quite small, and risk is controllable.”

Agricultural Bank of China (ABC) previously announced that its mortgages affected by risky real estate projects was around 660 million yuan, accounting for approximately 0.012% of its total mortgage balance, while Postal Savings Bank of China (PSBC) says approximately 127 million yuan of its home loans have been affected.

China Construction Bank (CCB) said in an official statement that the volume of its mortgages affected by construction project delays is comparatively small and that risk is controllable overall.

Joint-stock lender Industrial Bank Co. said that construction delays have affected 1.6 billion yuan of its mortgages, with 384 million yuan of these mortgages seeing suspension of repayments by borrowers, mostly of which are concentrated in Henan Province.