Chinese banks threatened by sixth straight quarter of rising NPL since 2011

NPL ratio rose to 0.96% by end-March.

The China Banking Regulatory Commission, the banking sector regulator, said Chinese banks’ bad loans rose while their capital strength fell in the first quarter of 2013.

The average non-performing loan ratio in China's banking sector rose to 0.96% at the end of March from 0.95% at the end of 2012. This is the sixth straight quarter the NPL ratio has risen since the final quarter of 2011.

Non-performing loans in Chinese commercial banks reached over US$85.5 billion in the first quarter.

Total assets of the Chinese banking sector stood at US$22.8 trillion in the first quarter, an increase of 17% year-on-year. The gross liabilities of Chinese banks rose 17% through the same period.

The weighted average capital adequacy ratio of Chinese banks was 12.3% at the end of March.

This CAR, however, is not comparable to previous data as tougher bank capital rules were introduced in January this year, CBRC said. According to calculations based on the new rules, the overall capital adequacy ratio has decreased.

CBRC requires major lenders to maintain a minimum CAR of 11.5% while other banks need a minimum CAR of 10%.