Banks in China Seeing Improvement
The economy has seemed to affect each and every country in the world. A bank by the name of China Construction Bank is one of the world’s largest banks. The bank stated recently that it has tightened its standards for allowing people to take out a loan. This allows the bank to focus on the “bad debt” portion of its business. Bad loan costs are actually really common in China. Banks are being more careful in how they deal with their loans. NPL numbers are a concern, but at the end of the day it is more important to make sure the bad loan business is taken care of.
Although some loans are increasing, some important markers are seeing a decrease. One of these departments is the real estate market that has seen a fall in manufacturing. The reports are showing that the NPL’s are doing so well that perhaps the numbers should be even higher. CCB is one of the biggest banks, but there are about three other competitors in China. Lenders have been warned that some of the loans that CCB gives out are classified wrong. There is a battle between earnings and between making sure the loans are fully covered.
In 2009 and 2010, local governments could be seen borrowing money from banks in China. This was a hopeful result to make the local economy speed up. The local governments are now not able to pay their debts and this is a major threat to the current economy. It’s said the local governments borrowed 10.7 million Yuan from local banks in China. The banks are trying to recover from handing out bad loans and making sure they get their money from local governments as well. CCB is managing the quality of their loans and making sure they only give loans to those who can be expected to pay.
All four major banks in China are working to see what will raise profits and NPL numbers. It’s only a matter of time before the economy in China gets better, but until then the banks need to do everything they can to get numbers back up.