FINANCE

China Banks Report Rise in Nonperforming Retail Loans

Published: Sep. 3, 2026 3:17 a.m. GMT+8

00:00

00:00/00:00

Listen to this article 1x

People walk past a bank's personal loan center in Huaian, Jiangsu province. Photo: VCG

Most of China’s listed banks reported a rise in nonperforming retail loans in the first half of 2026, as tighter risk-classification standards and weakening household repayment capacity pushed up delinquencies.

The broad deterioration in retail asset quality is prompting lenders to step up bulk transfers of troubled consumer debt and increase impairment provisions, adding pressure to the profitability of joint-stock banks as economic growth slows.

You've accessed an article available only to subscribers

Subscribe today for just $.99.

VIEW OPTIONS

Unlock exclusive discounts with a Caixin group subscription — ideal for teams and organizations.

Subscribe to both Caixin Global and Bloomberg - for the price of one.

Share this article

Open WeChat and scan the QR code

DIGEST HUB

Digest Hub

Back

Explore the story in 30 seconds

Chinese listed banks saw rising retail nonperforming loans in H1 2026, driven by stricter risk-classification standards and weakening household repayment capacity.
Bank of Communications posted the sharpest deterioration (up 0.44 pp to 2.02%); joint-stock bank net profits fell 2.6%, versus 4.4% growth at state-owned banks.
Lenders raised impairment provisions by 17.8% and accelerated bulk debt transfers, including Everbright’s 10.8-billion-yuan credit card portfolio.

AI generated, for reference only

Who’s Who

Bank of Communications Co. Ltd.: Bank of Communications Co. Ltd., one of China’s major state-owned banks, saw the sharpest deterioration in retail asset quality among the six large lenders. Its personal nonperforming loan ratio rose 0.44 percentage point to 2.02% by end-June 2026, driven by stricter risk classification and weaker household repayment capacity.

Industrial and Commercial Bank of China Ltd.: Industrial and Commercial Bank of China Ltd. reported a rise in its retail nonperforming loan ratio by 0.19 percentage point to 1.77% by end-June 2026, according to the article. This was among the six major state-owned banks that all posted higher personal bad-loan ratios.

Ping An Bank Co. Ltd.: According to the article, among 10 listed joint-stock banks, Ping An Bank Co. Ltd. was the only exception, with its retail nonperforming loan ratio unchanged at 1.23% in the first half of 2026, while nine others reported increases.

China Bohai Bank Co. Ltd.: China Bohai Bank Co. Ltd. reported a 1.13-percentage-point rise in its retail nonperforming loan ratio to 4.93% by end-June 2026, among listed joint-stock banks showing deteriorating retail asset quality.

Huaxia Bank Co. Ltd.: Huaxia Bank Co. Ltd. reported a rise in its personal nonperforming loan ratio by 0.74 percentage point to 2.85% in the first half of 2026, reflecting deteriorating retail asset quality amid stricter risk classification and weaker household repayment capacity.

Shanghai Rural Commercial Bank Co. Ltd.: According to the article, Shanghai Rural Commercial Bank Co. Ltd. bucked the trend of deteriorating retail asset quality, improving its personal nonperforming loan ratio to 1.55% in the first half of 2026.

China Merchants Bank Co. Ltd.: China Merchants Bank Co. Ltd. is a joint-stock bank. Its chief risk officer, Xu Mingjie, said retail asset quality is the main factor affecting overall asset quality, with risks from consumer co-debt still emerging. The bank faces pressure from rising nonperforming retail loans and higher impairment provisions.

Everbright Securities Co. Ltd.: According to the article, Everbright Securities Co. Ltd. (光大证券股份有限公司) is mentioned via its chief financial industry analyst, Wang Yifeng, who noted that listed banks increased impairment provisions by 17.8% year-on-year in the first half of 2026.

China Everbright Bank Co. Ltd.: According to the article, China Everbright Bank Co. Ltd. listed a credit card bad asset portfolio in early August with outstanding principal and interest of 10.8 billion yuan ($1.6 billion), the largest such offering so far this year.

Shanghai Pudong Development Bank Co. Ltd.: Shanghai Pudong Development Bank Co. Ltd. listed a 7.2-billion-yuan nonperforming loan portfolio in July, consisting largely of higher-end customers, including platinum cardholders, according to Caixin.

Western Securities Co. Ltd.: Western Securities Co. Ltd. reported that bulk transfers of personal business loan principal and interest totaled 10.7 billion yuan in the first half of 2026, up 46.3% from a year earlier, as a sluggish macroeconomy strained small business operators' cash flow and weakened repayment capacity.

AI generated, for reference only

What Happened When

2026：: Stricter credit card risk classification standard introduced; most listed city and rural commercial banks reported weaker retail asset quality; largest credit card bad asset portfolio offering so far in 2026 (China Everbright Bank Co. Ltd. listed portfolio with outstanding principal and interest of 10.8 billion yuan).

First half of 2026：: Most listed banks reported a rise in nonperforming retail loans; nine of 10 listed joint-stock banks reported increases in retail bad loan ratios; Ping An Bank Co. Ltd. was the only exception with ratio unchanged at 1.23%; China Bohai Bank Co. Ltd. posted a 1.13-percentage-point jump to 4.93%; Huaxia Bank Co. Ltd. rose 0.74 percentage point to 2.85%; listed banks increased impairment provisions by 17.8% from a year earlier; joint-stock banks' net profit fell 2.6%; state-owned banks' net profit grew 4.4%.

First six months of 2026：: Bulk transfers of personal business loan principal and interest totaled 10.7 billion yuan, up 46.3% from a year earlier.

As of June 2026：: The other four large state lenders reported ratios of 1.31% to 1.58%; Ping An Bank Co. Ltd. ratio unchanged at 1.23%; Shanghai Rural Commercial Bank Co. Ltd. improved its ratio to 1.55%.

By the end of June 2026：: All six of China's major state-owned banks had posted higher personal nonperforming loan ratios than at the end of 2025; Bank of Communications Co. Ltd. saw its retail bad-loan ratio rise 0.44 percentage point to 2.02%; Industrial and Commercial Bank of China Ltd. saw a 0.19-percentage-point increase to 1.77%; other four large state lenders reported ratios of 1.31% to 1.58%.

July 2026：: Shanghai Pudong Development Bank Co. Ltd. listed a 7.2-billion-yuan portfolio consisting largely of higher-end customers.

Early August 2026：: China Everbright Bank Co. Ltd. listed a credit card bad asset portfolio with outstanding principal and interest of 10.8 billion yuan ($1.6 billion).

August 2026：: Xu Mingjie, chief risk officer of China Merchants Bank Co. Ltd., said at a recent earnings briefing that retail asset quality is currently the main factor affecting overall asset quality; co-debt risks are still emerging.

AI generated, for reference only