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

Tyler Durden's picture




 

"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.

 

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Tue, 04/22/2014 - 22:43 | 4685257 Slave
Slave's picture

I just shit my pants.

Tue, 04/22/2014 - 23:00 | 4685304 NoDebt
NoDebt's picture

Yeah, but obviously the US and Europe has "de-coupled" from the downturns of any individual economy, just as it did in 2008.  And that worked out so well.

 

Tue, 04/22/2014 - 23:05 | 4685316 Xibalba
Xibalba's picture

You know what the talking heads say, "nicest house on a bad block".  What they fail to mention is that it's on fire. 

Tue, 04/22/2014 - 23:12 | 4685330 TruthInSunshine
TruthInSunshine's picture

Shit's getting real in the financial (where USD billions in CNY denominated loans sour BY THE DAY) & real economy in China -

News Headline Summary

China MIIT official Feng Fei says steel industry situation severe

Says:
- China to strictly control new steel capacity

Update details:
- Last month a senior official from the China Iron and Steel Association said that the domestic steel sector may have FACED ITS WORST Q1 SINCE THE YEAR 2000, as the quarterly CISA index measuring steel prices fell to its lowest in 20 years.

http://portal.ransquawk.com/headlines/china-miit-official-feng-fei-says-...

Tue, 04/22/2014 - 23:11 | 4685322 Dr. Engali
Dr. Engali's picture

Were you eating Chipotle? Did it leave blood in your underwear? If you said yes to these questions then Billy Mays has the solution for you.... Chipotleaway :

http://youtu.be/RlIHDauX3ao

Tue, 04/22/2014 - 22:52 | 4685283 pachanguero
pachanguero's picture

Big bubble here in Asia.  Looking for a Pin to prick it.

Wed, 04/23/2014 - 06:38 | 4685844 BandGap
BandGap's picture

From a short distance that chart looks like a black swan.

Tue, 04/22/2014 - 22:52 | 4685285 AdvancingTime
AdvancingTime's picture

Corruption has been a huge issue within China for years now more problems are brewing. China has entered a great credit trap and is awash in overcapacity and debt. Much of the recent growth in China after 2008 came from a massive 6.6 trillion dollar stimulus program that expanded credit and poured massive amounts of money into the system. This money encouraged expansion and construction with little regard as to real demand or need. 

After several years of growing debt concern is rising the whole unstable pyramid is about to come crashing down bringing China and possibly the global economy with it. This is not just about writing off a few bad loans. The shadow banking sector is so large that concerns exist about contagion and a domino series of defaults that might rack the economy as savers lose money. More on this subject in the article below.

http://brucewilds.blogspot.com/2014/03/china-and-great-credit-trap.html

Wed, 04/23/2014 - 00:28 | 4685484 dryam
dryam's picture

I don't think China really cares.  They know the current global monetary system will collapse with 100% certainty.  They learned a little from the U.S.  They blew a huge credit bubble to help garner as many real assets as possible:  commodity stockpiles, cities to nowhere, their military, productive factories, etc.  There *will* be contagion someday and the whole global monetary reset will be upon us.  We are getting very close to midnight and everything seems to be accelerating almost on a daily basis.

Wed, 04/23/2014 - 06:33 | 4685834 negative rates
negative rates's picture

And just when you are about to get the turbo blues.

Tue, 04/22/2014 - 22:54 | 4685287 Spitzer
Spitzer's picture

According to the deflationists, this is bullish for the RMB. Heh

Cuz when there is defaults, there is less currency in circulation.

Tue, 04/22/2014 - 22:55 | 4685291 pachanguero
pachanguero's picture

Pattaya, Thailand is expecting 20,000 condos due to come on line in 2014.

Are there that many Russians and PRC big fish to buy them all?  Nope!

I see it before my very eyes.  Worlds biggist bubbles ready to blow.

Ron Paul warned us......

Tue, 04/22/2014 - 23:27 | 4685380 Spitzer
Spitzer's picture

Thailand is a creditor nation now.

But yeah, it's pretty fct. Pattaya kicks ass. Rent brand new street bikes for $30 a day. Women hanging off of you.. Ahhh

Tue, 04/22/2014 - 23:53 | 4685436 Let them eat iPads
Let them eat iPads's picture

Those aren't women.

Tue, 04/22/2014 - 22:58 | 4685293 pachanguero
pachanguero's picture

I would not buy in Asia now.  I want a 50% haircut.  Then I might be a buyer of rental stuff.  Maybe.

Or maybe just stack AU.  That sounds like more fun.

Tue, 04/22/2014 - 22:59 | 4685301 Dr. Engali
Dr. Engali's picture

Don't worry. The fed heads assure us that it will be contained.

Tue, 04/22/2014 - 23:02 | 4685309 Unknown Poster
Unknown Poster's picture

If Chinese bankers need cheering up, they can always look to their ghost cities with pride.

Tue, 04/22/2014 - 23:02 | 4685310 Soul Glow
Soul Glow's picture

Bad loans are goos loans - ask JPM.

Tue, 04/22/2014 - 23:04 | 4685314 Cognitive Dissonance
Cognitive Dissonance's picture

The China miracle is running out of rabbits and hats.

Tue, 04/22/2014 - 23:15 | 4685338 Dr. Engali
Dr. Engali's picture

Hey Rocky. Watch me pull a rabbit out of my hat:

http://youtu.be/kRW7pITY5Cg

Tue, 04/22/2014 - 23:06 | 4685319 prains
prains's picture

undeniable that there's a shake down happenin in China but it's not real until all their cheep crap stops washing up on our shores, filling peoples homes and the manufacturing jobs return to north america. until then this is just talk

Tue, 04/22/2014 - 23:38 | 4685405 UselessEater
UselessEater's picture

'til then suicide-net sales will continue to increase in China.

Tue, 04/22/2014 - 23:27 | 4685382 TeraByte
TeraByte's picture

"The business environment this year has been “grim and complicated” as lenders face pressures on asset quality, liquidity and lending margins."This sounds  much like beyond China too. There are not enough quality assets globally as collateral to keep this credit feast going on forever. The proof in front of your eyes comes as increased banker mortality rate.

Tue, 04/22/2014 - 23:42 | 4685415 Freedumb
Freedumb's picture

Wi Tu Low, Ho Lee Fuk, etc etc

Wed, 04/23/2014 - 01:08 | 4685535 TideFighter
TideFighter's picture

Tu Meni Win Doe

Wed, 04/23/2014 - 05:04 | 4685717 Luckhasit
Luckhasit's picture

Yea, China has a shitload of hurt waiting in the wings. Too bad they don't have any gold in case their currency goes tits up.

Oh wait...

I can still hear them laughing their asses off about OP Twist and OP Fuckyoupayme. 

Wed, 04/23/2014 - 09:29 | 4686209 scubapro
scubapro's picture

 

 

"Rainy Yuan"  ?  is this an alias?      9.6billion is a small amount really.  but if you believe where you see one cockroach there are many you dont, and factoring in the usual asian 'save face at any cost' cultural environment, multiply by 20 and  you might have a better number....while it grows weekly.

Wed, 04/23/2014 - 09:54 | 4686277 NEOSERF
NEOSERF's picture

Like anyone really believes that bad loans will be marked to market...the Chinese have learned the Lehman lesson and these loans will be offset with increasing asset prices or the like...never fear.

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