China's Commercial Banks Tighten Restrictions on Real Estate Loans Despite Decreasing Non-Performing Loans

Strategic Insights -

Despite a decreasing trend in non-performing loans, China's commercial banks have tightened restrictions on loans granted to real estate developers in 2008. According to the financial results of five listed Mainland China commercial lenders, including ICBC, SDB, BoCom, BoC, and CCB, the proportion of loans granted for real estate development has decreased significantly compared to the previous year. The banks have implemented measures to control the risk of such loans, including lifting concerned thresholds and downsizing loan plans.

Key Takeaways:

  • ICBC, the biggest commercial lender in China, granted 10.6% of its total loans to real estate development as of 2008, a slight increase from 10.4% in 2007, but with a loan increase of CNY 42.56 billion, or 14.2%.
  • SDB, a city-level commercial bank, saw a decrease in the proportion of loans granted for real estate development to 5.6%, from 6.52% in 2007.
  • BoCom, the fifth biggest commercial lender in China, reported a decrease in the proportion of loans granted for real estate development to 6.67%, from 7.03% in 2007.
  • BoC, one of the nation's Big Four state-owned commercial lenders, saw a decrease of 0.79 percentage points in the proportion of loans granted for real estate development.
  • CCB, the nation's biggest mortgage and real estate lender, granted 2.22% of its total loans for real estate development, a decrease from 2007, but with a loan increase of 3.65%.
  • CCB's non-performing loan ratio for real estate development increased in the fourth quarter of 2008, and the bank has implemented measures to reduce its loan plan for 2009 by CNY 40 billion.

Statistics:

  • ICBC's loans for real estate development accounted for 10.6% of its total loans as of 2008, with a loan increase of CNY 42.56 billion, or 14.2%.
  • SDB's loans for real estate development accounted for 5.6% of its total loans, a decrease from 6.52% in 2007.
  • BoCom's loans for real estate development accounted for 6.67% of its total loans, a decrease from 7.03% in 2007.
  • BoC's loans for real estate development accounted for 8.34% of its total loans, a decrease of 0.79 percentage points from 2007.
  • CCB's loans for real estate development accounted for 2.22% of its total loans, with a loan increase of 3.65%.
  • CCB's non-performing loan ratio for real estate development increased in the fourth quarter of 2008.

Sources:

  • SinoCast Daily Business Beat via COMTEX, April 1, 2009.