The Industrial and Commercial Bank of China (ICBC) yesterday revealed its ratio of non-performing loans (NPLs) for the first time as Chinese banks take steps towards opening up now that the country has entered the World Trade Organization.
By the internationally accepted five-category loan classification, NPLs from China's largest commercial bank accounted for 29.8 percent of the total of outstanding loans at the end of last year, the bank said in a press release.
An ICBC official said its outstanding loans totaled 2.66 trillion yuan (US$320 billion) at the end of 2001, virtually putting its NPLs at 792.5 billion yuan (US$95.5 billion).
High NPL ratios are one of the most alarming problems in China's banking industry, threatening its overall financial security and impeding key reforms, including listing plans.
Dai Xianglong, governor of the central People's Bank of China, said earlier this year that 25.37 percent of the loans at the four biggest State-owned commercial banks were non-performing.
The ICBC said its end-of-2001 NPLs dropped by 39 billion yuan (US$4.7 billion) from a year earlier and their share in total bank loans was 4.65 percentage points lower from the end of 2000.
By Chinese standards, the ICBC's NPL ratio was 25.7 percent of its total loans, 23.4 billion yuan (US$2.8 billion), or 3.59 percentage points lower than the end of 2000.
The NPL ratios of new loans stood at 1.1 percent, 0.47 percent and 0.22 percent respectively in the three years since 1999 and part of its loan products "achieved or approached top quality levels in the international banking industry," it said.
"The decline in non-performing loans has improved the profitability of the Industrial and Commercial Bank of China," a spokesman said. "And the improved profitability is reinforcing its ability to dissolve non-performing loans."
The bank's profits, to be deducted by bad loan provisions, stood at 34 billion yuan (US$4.1 billion) in 2001, 2.4 times more from a year earlier.
The figure is predicted to be 40 billion yuan (US$4.8 billion) for this year.
The spokesman said ICBC aims to bring its NPL ratio, by Chinese standards, below 30 percent by the end of 2003 and the five-category NPL ratio, down to 10 percent in five years.
(China Daily April 26, 2002)
