China CITIC Bank Corp Ltd announced on Thursday its nonperforming loan ratio fell 0.14 percentage points from the end of last year to 1.5 percent at the end of June, hitting a record low since 2016.
The Beijing-headquartered national joint-stock commercial lender also recorded a drop in its outstanding balance of nonperforming loans (NPLs) by 2.77 billion yuan ($427.2 million) to 70.68 billion yuan during the same period, while its provision coverage ratio increased 17.69 percentage points to 189.37 percent.
Fang Heying, president of China CITIC Bank, said: "We are confident that our bank's asset quality will keep improving. In the first half of this year, its nonperforming loans dropped quarter by quarter and provision coverage ratio largely increased. As a result, we saw a downward trend in risk pressure on the bank."
In the first half, new NPLs for the bank decreased 1.2 billion yuan year-on-year, among which new nonperforming corporate loans dropped 12 percent. New nonperforming credit card loans increased 1.4 billion yuan on a yearly basis, but the upward trend has been contained.
The average new monthly nonperforming credit card loans in the second quarter declined 29 percent from that in the first quarter. At the end of June, overdue credit card loans dropped 2.8 billion yuan from the beginning of this year, and special-mention credit card loans — potentially weak credit card loans presenting an unwarranted credit risk — fell 3.7 billion yuan, Fang said.
The bank also accelerated the disposal of NPLs. In the first half, it disposed of 56.8 billion yuan in nonperforming assets, up 80 percent year-on-year, and recovered 6.2 billion yuan in assets that had already been written off, up 37 percent year-on-year.
"We chose low-risk clients in spite of the fact that returns are relatively low and cut the size of business of high-risk, high-reward credit card installments, which allow customers to split purchases over multiple billing statements," Fang said.
The bank also strengthened credit extension management, stepped up governance of concentrated risk in loan portfolios, and accelerated the building of digital risk management strategies and capabilities.
Hu Gang, vice-president of China CITIC Bank, said the commercial lender will keep conducting research on national policies and further optimize its credit structure.
"China has set a goal to promote the common prosperity of all people through high-quality development. The country is undergoing an adjustment of the underlying logic of economic development, which will bring huge changes to all sectors. The economic development and risks in some regions may also be affected. We will conduct in-depth studies and restructure asset portfolios in this context," Hu said.
In the first half, the ratio of the bank's lending to strategic emerging industries to total loans increased 1.06 percentage points from the beginning of this year, and the ratio of its green loans to total loans rose 1 percentage point, he said.