Banking Regulator Lauds Achievements as Chinese Banks' Non-Performing Loans Drop

BEIJING, Mar. 17 (Xinhua) -- Chinese commercial banks' balance and ratio of non-performing loans (NPLs) fell remarkably under the industry's risk control drive, the banking regulator said Wednesday.

The balance and ratio of Chinese major commercial banks' NPLs stood at 364.6 billion yuan (55.5 billion U.S. dollars) and 1.15 percent, respectively, by the end of 2010, marking a sharp contrast from the 2002 level of 2.28 trillion yuan and 23.61 percent, said Liu Mingkang, head of China Banking Regulatory Commission (CBRC), the banking regulator.

Liu said risk control awareness has been integrated into the banks' strategic planning and daily operations thanks to the guidance of the CBRC, according to a statement posted on CBRC website.

Provision coverage ratio, the ratio of provisioning to gross non-performing assets which indicates the extent of funds a bank has kept aside to cover loan losses, increased to 218.25 percent by the end of 2010 from 6.7 percent in 2002.

The total value of Chinese banks' assets more than tripled from that of 2003 to hit 95.3 trillion yuan by the end of last year while net profit was 28 times the 2003 level, said Liu.

China's banking industry had strengthened support to the country's small enterprises and rural areas, Liu said.

By the end of last year, outstanding loans to small enterprises by banks and financial institutions hit 7.3 trillion yuan, accounting for 24 percent of total loans to enterprises, he said.

A total of 395 new types of rural financial institutions, such as village banks, loan companies and rural mutual cooperatives, had been founded by the end of 2010, and 114 more had given the nod for establishment.

Loans to rural areas totalled 11.8 trillion yuan by the end of last year, marking a dramatic increase from 3.9 trillion yuan in 2007.

Liu also noted that China will further enhance risk controls in the banking industry over the next five years.

CBRC will formulate scientific development strategies in line with the country's economic and social development to help the banking industry cast off an extensive type of development mode marked by sheer chase of scale, expanding speed and market shares.

"We will also explore a differentiated development path for the banking industry based on its own comparative advantages and characteristics of its target market," said Liu.

CBRC will deepen the institutional reform of the banking industry by promoting the efficiency of company administrators through compensation incentives.

Liu also vowed to improve financial services and continue efforts to support agriculture, the countryside and farmers. Small enterprises,energy-saving ones, and the environmental protection industry will also receive continued support.