China’s Listed Banks See Improvements to Asset Quality, NPL’s Hit Record Lows


China’s listed banks have seen improvements to their asset quality in the first quarter of 2022, according to the latest round of performance results.

As of the end of June a total of 11 listed banks in China had released their quarterly performance results, with all of them reporting declines in their non-performing loan (NPL) ratios.

Nine banks posted NPL ratios of less than 1%, including Bank of Hangzhou, whose NPL ratio was just 0.79%. Multiple banks also posted their lowest NPL’s on record following multiple quarters of decline, including Bank of Wuxi, Bank of Hangzhou, Zijin Bank and Jiangyin Bank.

Nine out of the 11 banks that have released their performance reports also posted increases in their provisions coverage ratios compared to the start of the year.

“Against a background of increasing downwards economic pressure, it has not been easy for these banks to achieve declines in their NPL ratio’s in the second quarter,” said Liao Zhiming (廖志明), chief banking sector analyst at China Merchant Securities to Securities Daily.

“Small and medium-sized banks disposed of 594.5 billion yuan in NPL’s in the first half, for an increase of 118.4 billion yuan compared to the same period in the first half.”

Liao pointed out, however, that the cohort of banks that have thus far posted their quarterly results are mainly situated in the Zhejiang province region, which is more economically developed and less subject to NPL pressure.