FINANCE

Chinese Banks Face Retail Loan Woes, Moody’s Says

Published: Nov. 11, 2025 3:59 p.m. GMT+8

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Chinese banks are grappling with sluggish growth and deteriorating asset quality in their retail lending businesses, creating new pressure points, according to a Moody’s executive.

The weak performance in retail credit, evident in the third-quarter reports of Chinese mainland-listed banks, stems chiefly from structural rather than cyclical factors, said Nicholas Zhu, a vice president in Moody’s financial institutions group. China’s banks must transform their operations to adapt to a new era of slower, high-quality economic growth, Zhu said.

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Explore the story in 30 seconds

Chinese banks face sluggish growth and worsening asset quality in retail lending, mainly due to structural factors.
Retail credit, especially mortgages and consumer loans, is weak, with Moody's expecting this trend to last 18 more months.
Rising credit card delinquencies signal deterioration, but Moody’s finds systemic risk in China’s financial system unlikely.

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Moody's: Moody's, a financial institutions group, highlights concerns about Chinese banks' retail lending businesses. Nicholas Zhu, a Vice President at Moody's, points to deteriorating asset quality and sluggish growth stemming from structural issues, not just cyclical ones. Moody's expects this weakness, particularly in mortgages and consumer credit, to persist for the next 18 months, diminishing retail loans' traditional role as a buffer against corporate lending volatility.

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