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Stable Bad-Debt Figures Mask Problems at Smaller Lenders

By Wu Xiaomeng and Dong Tongjian
Smaller banks, particularly city commercial banks, which have been more aggressive in their lending practices, saw their average nonperforming loan ratio increase to 2.95% at the end of the third quarter, up from 2.49% at the end of 2016. Photo: Visual China
Smaller banks, particularly city commercial banks, which have been more aggressive in their lending practices, saw their average nonperforming loan ratio increase to 2.95% at the end of the third quarter, up from 2.49% at the end of 2016. Photo: Visual China

China’s commercial banking sector has managed to keep its official nonperforming loan (NPL) ratio steady for the past year, with the latest data from the industry regulator showing bad debts amounted to 1.74% of outstanding loans for the fourth straight quarter.

But the number masks a significant and growing divergence between the performance of the big state-owned banks and smaller lenders, numbers released on Friday by the China Banking Regulatory Commission (CBRC) show.

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