China’s real estate industry stable, the sector’s bad loan ratio very low – banking regulator

 

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China’s real estate industry remains largely stable and the non-performing loan (NPL) ratio of bank loans to the sector remains low at about 1%, even below the average level, said Xiao Yuanqi, Vice Chairman of China Banking and Insurance Regulatory Commission (CBIRC), at the Global Financial Leaders’ Investment Summit in Hong Kong.

The real estate sector plays a very important role in China’s economy and bank loans to the sector account for 26% of the total bank lending, he said.

China’s bank loans to the real estate sector are mostly home mortgage loans, which accounted for 90% of the total, and the quality of the loans has been very high, with default rate of only 0.1% in the past 20 years, he said.

Medium- and small-sized banks’ exposure to the real estate sector is even smaller than large banks as the authority has encourage the smaller banks to support local small business, with some small banks’ lending to small business accounting for more than 90% of their total loans, said Xiao.