China banks: Bad loans increase
The number of defaulted loans in the balance sheets of Chinese banks continues to grow: According to a recent report by Bloomberg, China’s NPL ratio rose more sharply in the first quarter of 2019 than it had in several years. In order to improve the situation of domestic companies, the government had decided to increase lending to companies – at the expense of the banks. Because the financial institutions bear the risk, should the loans not be repaid.
According to Shujin Chen, chief financial analyst at Huatai Securities Co. in Hong Kong, the pressure to lend to small and micro-enterprises may gradually start to appear in Chinese bank’s NPLs. She also implied that weaker economic conditions will also impact bad loans though as a share of total lending it may remain little changed. Bloomberg