SHANGHAI: The asset quality of large state-owned commercial banks in China stabilised and improved in the first half of this year, with noticeable improvements in indicators like the non-performing loan (NPL) ratio.

       Industrial and Commercial Bank of China (ICBC), the country’s largest commercial lender by assets, has effectively contained a rebound of the NPL ratio since the outbreak of Covid-19. Its NPL ratio fell 0.04 percentage point from the end of last year to 1.54% at the end of June.

       The enhancement of its asset quality goes hand in hand with the gradual recovery of the Chinese economy from the pandemic.

       “As the domestic economy continuously recovered in the first half, we saw a steady slowdown in the growth of our bank’s corporate loans whose principal and interest repayments were deferred.

       “Such loans are mainly associated with clients in road transportation and new-type urbanisation industries, of which the risk resistance capacity is relatively strong, and our bank took effective measures to manage such loans,” said Wang Jingwu, senior executive vice-president of ICBC.

       China’s forthcoming exit from the policy of deferring payments of principal and interests on inclusive loans to micro and small businesses next year will have a limited impact on the asset quality of China Construction Bank Corp (CCB), said Cheng Yuanguo, chief risk officer of the bank.

       “CCB implemented the five-category classification of loans strictly and prudently without changing classification standards during the extension of inclusive loan repayments. We also made arrangements for post-Covid-19 risk management through forward-looking risk identification and monitoring, fully exposed risks and stepped up NPL disposal to release potential risks,” Cheng said.

       Although China will still face external uncertainties in the second half, direct factors supporting its economic operation are increasing step by step. The asset quality of CCB is expected to remain stable and its ability to offset risks will remain adequate, he said.At the end of June, the NPL ratio of CCB was 1.53%, down 0.03 percentage point from the end of last year.

       Over the same period, Bank of China (BoC) also recorded a decline in the NPL ratio by 0.16 percentage point to 1.3%.

       “The overall asset quality of BoC was further consolidated, especially as its domestic institutions stepped up efforts to dispose of NPLs,” said Liu Jiandong, chief risk officer of the bank. — China Daily/ANN