Top Banks in China Witnessing Increasing Rise in Bad Loans

Published By : 27 Aug 2015 | Published By : QYRESEARCH

In the past few decades, China has demonstrated a high growth rate. China was considered the fastest growing economy. This growth has propelled several sectors in China such as BFSI, construction, and manufacturing. However, as the economy of China in the past few months has been showing ups and downs in growth, the outlook for China’s economy has changed. This faltering economy was projected to recover to a steady growth again. However, now it seems that the economy of China is declining at a pace that was not expected. Several sectors in China are now suffering due to this falling growth rate.

One of the sector that is greatly affected by this slowdown in China’s growth is the country Banking, Financial Services, and Insurance sector. Two of the banking giants in the nation that are the first to report earnings this week have two things in common, these include pilling of loans and zero profit growth. This is now happening twice the pace as compared to the previous year.

The first bank is Industrial and Commercial Bank of China Limited that posted a 31 per cent rise in bad loans during the first half of the year. On the other hand, the Agricultural Bank of China Limited witnessed a 28 per cent rise in their stock exchange statements yesterday. Agricultural Bank declared a decline in profits that was of 0.8 per cent which is 50.2 billion Yuan and bad loans amounted to a massive 159.5 billion Yuan, this also includes the debt in mining and construction industries.

ICBC, which is one of the large lenders in China reported yesterday that it witnessed declines in their net interest margins, which is a measure of lending profitability. Furthermore, the rural lender also witnessed the biggest fall wherein it experienced a slide of 15 basis points as compared to an earlier year of 2.78 per cent.
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