China's Largest Manager Of Bad Debt On The Economy: "Grim And Complicated"

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"The business environment this year has been "grim and complicated"; that is the message from China's largest manager of bad debt. As Bloomberg reports, China’s bad-loan ratio rose "significantly" in the first quarter, increasing risks for the nation’s banking industry, driving up banks’ sour loans for a ninth straight quarter as of December to the highest level since 2008. Huarong expects pressures on asset-quality, liquidity, and lending margins to continue.

 

 

As Bloomberg reports, new nonperforming loans amounted to more than 60 billion yuan ($9.6 billion) in the first two months of this year, compared with 100 billion yuan for all of 2013, China Business News reported on April 9, citing people it didn’t identify.

The economic indicators we’ve seen so far are quite disappointing and repayment risks are rising across sectors from property to small businesses due to weak demand,” Rainy Yuan, a Shanghai-based analyst at Masterlink Securities Corp., said by phone.

 

Banks will be hit in such an operating environment but managers of bad assets like Huarong and China Cinda Asset Management Co. stand to benefit” because they can accumulate more sour loans, she said.

China Huarong Asset Management Co. (the nation’s largest manager of soured debt) Chairman Lai Xiaomin said during an internal meeting on April 15, according to a statement today on the website of the Beijing-based company...

The business environment this year has been “grim and complicated” as lenders face pressures on asset quality, liquidity and lending margins...

China’s bad-loan ratio rose “significantly” in the first quarter, increasing risks for the nation’s banking industry...

The bad-debt data pointed to a “clear downward trend” in banks’ asset quality, Raymong Yung, PwC’s China financial services leader, told reporters in Shanghai today. Lenders’ nonperforming loans will rise further, he said.