Loan Loss Reserves Fall Below Regulatory Red Line, Some Banks Assume Cut to 120 pc

Shanghai Daily: ICBC’s bad-loan ratio worsens
THE bad-loan buffer of Industrial and Commercial Bank of China fell below the regulatory minimum, highlighting debt issues again in Chinese banks.

ICBC’s coverage for bad loans stood at 141.21 percent of the current 204.66 billion yuan (US$31.6 billion) of non-performing loans by March, the world’s largest bank by assets said in a statement to Hong Kong’s stock exchange yesterday. The provisions breached the current regulatory minimum of 150 percent for the first time since it listed.
The government is expected to ease requirements on banks this year, and the iFeng article below claims some banks are assuming the regulatory minimum may drop t0 120%.

iFeng: 国有大行拨备覆盖率跌破红线!为利润让道?

Bank of China announced on the 26th of a quarterly reporting period, the NPL coverage ratio was 149.07 percent. 28, ICBC a quarterly show, the first-quarter provision coverage ratio was 141.21 percent, are less than the CBRC had set 150% of the regulatory red line.

...Caixin has reported that at the end of March, the difference in regulatory thinking, seven listed banks will be dynamically adjusted provision coverage ratio fell to 130% -140% range. China Banking Regulatory Commission said that the measures are still being studied.

● Agricultural Bank (601288.SH, 1288.HK), China Construction Bank (601939.SH, 0939.HK), China's banking provision coverage may be reduced to 130%;

● Industrial and Commercial Bank of China, Bank of Communications (601328.SH, 3328.HK), China Merchants Bank (600036.SH, 3968.HK), Industrial Bank provision coverage may be reduced to 140%;

● CITIC Bank (601998.SH, 0998.HK), Shanghai Pudong Development Bank, Everbright Bank, Minsheng Bank ( 600016.SH, 1988.HK), Ping An Bank, Huaxia Bank [ 0.99% funds research report ] will keep 150% of the official requirements remain unchanged.

As early as February of this year, Bloomberg, citing people familiar with news on condition of anonymity, the State Department is considering lowering the bank bad debt provision coverage. China Banking Regulatory Commission has not yet determined the specific details. Two informed sources, some large banks assume 120% coverage in 2016 when budgeting.
WSJ: Big China Banks Relax on Liquidity to Do More Lending
Banks continued to lower their cash buffer for bad loans, as they have done steadily in recent years. But for the first time the level fell below the minimum of 150% of their bad loans, which the government requires the banks to maintain to safeguard their ability to weather losses.

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