China banks seek new lending horizons as bad debts rise
China’s biggest banks are turning their back on mainstay borrowers like manufacturers and courting high growth industries such as healthcare, food and IT in a bid to boost revenue.
For the first half of this year, the banks reported an increase in bad loans from the Yangtze delta.
China’s biggest bank, the Industrial and Commercial Bank of China (1398.HK) (601398.SS), also said 80 percent of new non-performing loans in the second quarter came from manufacturing and wholesale.
Several lenders said they expect bad loans to continue rising this year, especially from creditors in the steel, wholesale and shipping sectors.
Other bankers said they would look to generate more revenue from asset management, trust lending and financial leasing.
But with the level of bad loans as of June at its highest since 2011, the government may give lenders more autonomy.
“Misdirected lending is the biggest bane of banking, because it might lead to credit losses and ultimately they’ll have to write off those losses,” said Roshan Francis Padamadan, who manages $2.1 million for investors in the Luminance Global Fund.
Source: Reuters
