BEIJING, July 29 (Agencies) -- Chinese banks will be able to cope even if property prices drop by 50 percent in the worst case scenario, the country's top banking regulator, Liu Mingkang, said in an interview with state television on Friday.
Liu's comments followed the latest stress test made by the China Banking Regulatory Commission (CBRC) to assess the impact of possible property price declines on the banking sector amid an array of measures to curb rising housing prices, according to the China Central Television.
"The result of the stress test has told us, in the worst scenario, even if housing prices drop by 30 or 50 percent, banks are still able to handle the non-performing loans," said Liu, chairman of the CBRC.
"The talk that lenders are coerced by the property developers cannot stand," he added.
Liu said that higher capital adequacy ratios at banks will help them cope with lending risks and the positive result of the stress test will boost lenders' confidence to further implement the tightening property measures.
The weighted average capital adequacy ratio of Chinese banks rose to 12.2 percent at the end of 2010 from 11.4 of a year earlier, but the ratio fell to 11.8 percent at the end of March 2011.
China's housing inflation quickened slightly to 4.2 percent in June from 4.1 percent in May, keeping up pressure on the government to rein in the property sector.
China has announced a flurry of policies to cool property price rises, including home purchase restrictions, the launch of a property tax and increased mortgage rates.