Chinese Debt Buildup, More on Dongbei Steel

Reuters: China bank profits flat-line as bad debts continue to soar
Non-performing loans (NPLs) reached a 10 year high of 1.27 trillion yuan ($195 billion) last year, or 1.67 percent of all loans outstanding as of December, showed data from the China Banking Regulatory Commission.

However, analysts said some banks appear to be delaying recognising some loans as soured. The potential real bad loan ratio may be 8 percent to 9 percent, banking analyst Li Nan at Beijing Gao Hua Securities wrote in a recent report.
Remember this story from a week ago, via Caixin: Gov't May Let Banks Hold Less Cash in Reserve for Sour Loans. Whatever earnings are reported, they are likely to be inflated going forward based on those account changes.

Reuters: China's BoCom sees tough 2016 as corporate banking dives
Bank of Communications Co Ltd (BoCom) (601328.SS) (3328.HK), China's fifth-largest lender, said hitting 1 percent profit growth in 2016 will be a stretch, reporting a dive in corporate banking as bad debts keep mounting.

BoCom reported its fourth year of slowing profit growth on Tuesday, while the bank's bad loan ratio increased for the 15th consecutive quarter.

"To maintain 1 percent net profit won't be easy," BoCom's president Peng Chun said during a news conference in Hong Kong when asked how the bank's earnings would compare to last year.

...BoCom's non-performing loan ratio rose to 1.51 percent by end-December, from 1.42 percent at end-September.
No surprise to the market and BoCom's stock is up in March.
BoCom's net interest margins - the difference between a bank's borrowing rate and interest earned on loans - fell to 2.22 percent from 2.24 percent at end-September.

The bank said in its annual results that the margin squeeze was "due to the gradual acceleration of interest rate liberalisation."

Loan loss provisions, the amount of capital a bank has to set aside to buffer against bad debts, fell to 155.57 percent from 165.3 percent in the previous quarter.
All negative for real future earnings, with big earnings restatements coming later should NPLs take off.

Finally, FT provides more details on the situation at Dongbei Steel: China steelmaker Dongbei Special defaults on $131m debt

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