Domestic banks score highly as key targets met

Source: Xinhua  |   2008-11-17  |     NEWSPAPER EDITION

CHINA'S top banking regulator rated the country's banking industry as healthy with total assets increasing rapidly, bad loan rates dropping and capital adequacy ratio rising.

"The performance of Chinese banks has reached a historic peak," said Jiang Dingzhi, vice chairman of the China Banking Regulatory Commission, at a financial forum in Beijing on Saturday.

Total banking assets amounted to 59.3 trillion yuan (US$8.68 trillion) by September, said Jiang. The figure had increased more than fourfold from a decade ago during the Southeast Asia financial crisis.

Profit after tax of Chinese banks reached 446.7 billion yuan, a 12-fold increase from the 36.4 billion yuan reported in 2002.

"Profits continue to rise rapidly this year," said Jiang without giving specific numbers.

The regulator's statistics showed the non-performing loan rate of major commercial banks had dropped for the sixth consecutive year to 5.5 percent from more than 20 percent in 2002.

"The bad loan rate will go down further after the Agricultural Bank of China completes its joint-stock transformation reform," said Jiang.

As the last of the four major state-owned commercial banks to be turned into a joint-stock company, ABC signed an agreement on November 6 with Central Huijin Co, an investment arm of the government, for a 130-billion-yuan capital injection as part of its preparation for an eventual listing. The bank's non-performing loan rate stood at 23.5 percent by last year.

In addition, the capital adequacy ratio of 192 commercial banks nationwide had exceeded 8 percent by the third quarter. Only eight banks met the 8-percent criterion back in 2003.

The ratio is used to track a lender's capacity to tackle financial risks. The ratio of a bank should not fall below 8 percent, the minimum standard set by the People's Bank of China, the central bank.

Jiang said China may face a more formidable economic environment due to the global financial crisis.