Business / Markets

Bad loans to increase 10% in 2012: report

By Wang Xiaotian (chinadaily.com.cn) Updated: 2012-11-01 15:27

New bad loans among Chinese commercial lenders in 2012 will increase 10 percent from last year, according to a report released by the China Orient Asset Management Corp on Wednesday.

The non-performing loans ratio might be as high as 2 percent, mainly driven by more sour loans in the property sector, the report said.

Lending to export-oriented companies and local governments through financing vehicles ranked second and third in terms of the contribution to the NPLs.

"Risks related to NPLs will not break out this year, as liquidity improved after the government implemented more policies to stabilize economic growth," it said.

Worsening asset quality will provide more opportunities for asset management companies, as lenders will tend to sell more asset packages with relatively lower prices, according to the report.

It said rural commercial banks are more likely to sell assets at low prices.

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