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China’s Commercial Banks’ Bad Debt Ratio Declines in 1Q23

China’s commercial banks have shown a positive trend in managing non-performing loans (NPLs), with the National Financial Supervisory Board (NFRA) reporting a decrease in the NPL ratio to 1.62 percent during the first quarter of this year. This indicates a stable asset quality for these banks.

The NFRA disclosed that the bad debt figures have declined by 0.01 percent since the end of 2022. By the end of March, the outstanding bad debt of Chinese commercial banks stood at 3.1 trillion yuan (approximately 440.62 billion U.S. dollars), reflecting an increase of 134.1 billion yuan from the previous year’s end.

Moreover, the overall outstanding debt of commercial banks in China has reached a total of 189.4 trillion yuan.

The decline in the bad debt ratio is a positive development for China’s banking sector, as it demonstrates improved loan management and reduced financial risks. These figures indicate that the efforts made by the commercial banks to address non-performing loans are yielding favorable results.

The NFRA’s report highlights the continued stability of China’s banking system, providing confidence to investors and contributing to the overall economic resilience of the country.

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