China banks' NPL ratio flat at 1.74% in Q1

Asset quality has largely stabilised.

According to UOB Kayhian, as of 1Q17, NPL ratio of the banking industry was at 1.74%, flat yoy.

"We note that asset quality trend of SOE banks has improved, while JSCBs and rural commercial banks saw continued deterioration."

Here's more from UOB Kayhian:

Banks benefit from the on-going stabilisation in asset quality and NIM. However, the PBOC focuses on controlling and preventing financial risks and has hence tightened liquidity.

Large SOE banks are less affected due to their strong deposit franchise, diversified businesses and lean cost structure. We believe large banks also have better risk culture and more stringent scrutiny on NPLs.