Loan defaults up slightly in Zhejiang

The non-performing loan rate of financial institutions in Zhejiang province grew slightly in 2013 to 1.84 percent, or 0.25 percentage points from the beginning of the year, Shanghai Securities News reported.

Zhejiang saw the bad loans jump by 0.06 percentage points in first half of 2013 and increase another 0.19 percentage points in the second half.

The non-performing loan rate in Wenzhou, which was hit heavily by bad loans, stood at 4.41 percent at the end of 2013, up by 0.66 percentage points from the beginning of the year. Loan performance in the city behaved slightly better in the first half of 2013, seeing a 0.07-point decrease in bad debt. But the situation got worse in the second half.

Media reported that the bad loan rate in Zhejiang province was not high for China, but the non-performing loan balance is increasing and requires more attention.

In December 2013, the month-on-month bad loan ratio in Zhejiang and Wenzhou declined 0.03 percentage points and 0.04 percentage points.

An insider from the banking system was quoted by Shanghai Securities News as saying that banks in Zhejiang wrote off some bad loans at the end of 2013, which caused the month-on-month rate to show a decline.

The increasing non-performing loan ratio has resulted in a sharp decline of new loans in Wenzhou, which significantly increased industrial investment in 2013. Whether investment will continue with less support from bank loans remains unclear.