Bad loans at Chinese banks surged by the most in more than a decade in the first quarter, while profit growth continued to slow, the China Banking Regulatory Commission said Friday.
Non-performing loans in commercial banks jumped by 140 billion yuan (U.S.$22.53 billion) in the first three months to 982.5 billion yuan by the end of March, the CBRC said in a statement.
The increase is the biggest since quarterly data became available in 2004 and equivalent to about 56 percent of new bad loans in 2014.
The non-performing loan ratio, the proportion of bad loans against the total unpaid loans, rose by 0.15 percentage point quarterly to 1.39 percent by the end of March. The NPL ratio rose by 0.25 percentage point last year to 1.25 percent by the end of December.
Another 2.48 trillion yuan loans could potentially turn sour, according to the data.
Since last year, credit defaults have spread from private firms to small state-owned enterprises on worries over slower economic growth and a cooling property market in smaller cities.
Baoding Tianwei Group Co last month became the first SOE to default on an onshore bond after failing to pay 85.5 million yuan in interest.
Meanwhile, the combined net profit of commercial banks rose just 3.73 percent annually to 443.6 billion yuan in the first quarter. The growth was about one fourth of that recorded in the same period last year.
The financial reports of 16 listed banks showed the annual profit growth at the five largest state-owned banks came in below 2 percent in the first quarter, while some smaller joint-stock banks managed to grow their net earnings by double digits.
