Record lending totals in China will not lead to an increase in bad debts in 2010, and loan profitability among the country's banks is expected to improve, predicts Industrial & Commercial Bank of China Ltd. (ICBC) Chairman Jiang Jianqing.
New loans at China's largest bank will double this year even as credit growth slowed in the second half of the year, Jiang said during a briefing in Singapore on Wednesday, according to a news release.
ICBC extended a record 1.01 trillion yuan ($146 billion) of new credit in the first nine months as it helped finance China's $586 billion stimulus plan. The bank made 33 billion yuan of new loans in October and expects to maintain similar levels in November and December, ICBC Vice President Niu Ximing said earlier this month.
Jiang added that because the Chinese economy is recovering, Chinese banks are slowing down lending, meaning loan growth rates in the second half will be slower than in the first half.
ICBC, Bank of China Ltd. and China Construction Bank Corp., the country's three largest banks, last month reported third-quarter profit that beat analysts' estimates, thanks largely to the loan surge and lower provisions for potential losses on loans and investments, reports Bloomberg.
Asset quality also has improved at all three banks in 2009, leading to less bad debt and provision charges. ICBC's bad loans declined to 93.5 billion yuan as of September, accounting for 1.68% of total advances. The ratio fell to 1.63% at Bank of China and 1.57% at Construction Bank.