Growing NPLs won't cripple China banking sector, says S&P

Jul 22, 2010

China’s banking sector will have a higher non-performing loan ratio in coming years, but good profitability, strong liquidity and adequate capitalisation will enable the major lenders to absorb unexpected credit losses.

Non-performing loans (NPLs), the inevitable aftermath of China's unprecedented credit boom in 2009, will increase gradually in the coming years, and the country's less creditworthy local government financing vehicles are expected to suffer the most damage, says Standard & Poor's.

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