Read More
Staff reporterStress arising from retail loans and inclusive micro and small enterprise lending has caused the bad loan ratios related to personal borrowers and credit cards to rise in the first half of the year among Chinese banks tracked by the global rating agency.
Mainland banks face higher risks due to exposure to retail loans in light of dim income outlook and falling home prices, said Fitch Ratings.
ADVERTISEMENT
SCROLL TO CONTINUE WITH CONTENT
The loans to micro and small businesses accounted for 13 percent of China's banking system as of June, after lending grew significantly on regulatory support since 2019.
Rural banks are most exposed to lending to micro and small enterprises, facing higher risks due to borrowers' lower income levels and weaker collateral.
"The underlying asset-quality deterioration could exceed reported figures, due to various forbearance measures including loan extensions until 2027", Fitch said in a statement.
Although interest rate cuts have eased household repayment burdens, Fitch pointed to bank earnings pressure due to weak confidence in income stability and negative wealth effect resulted from falling property prices.Beijing has released a series of incentives to lure mainland residents to spend more, especially during the ongoing Double 11 shopping gala, and make it easier for smaller businesses to borrow.
The balance of loans to small and micro-enterprises nationwide increased 14.7 percent year-on-year to 32.58 trillion yuan (HK$35.65 trillion) as of September, with the average interest rates lowered by 0.35 percentage points to 4.42 percent, the National Financial Regulatory Administration said yesterday.In other news, Chinese property developer Sunac China (1918) was reportedly to be seeking to cut its yuan-denominated bonds by more than half under a proposed onshore restructuring plan.
Sunac's October home sales jumped 54 percent to 7.3 billion yuan from one year ago, although the contracted sales area decreased by over 42 percent to 187,000 square meters over the same period.
Retail loan risks are growing. BLOOMBERG














