When QE Ends, China Slows

Baidu: 银行房地产不良贷款现“双升”，警惕违约风险向金融体系蔓延

As the semi-annual reports of listed banks have been disclosed one after another, credit risk in the real estate sector has once again attracted attention. The reporter combed through the semi-annual reports and found that, regardless of whether large state-owned commercial banks, joint-stock commercial banks or city commercial banks, the balance of non-performing loans and non-performing loan ratios of most banks in the real estate sector have seen a "double increase."

Judging from the data disclosed by major state-owned banks, as of the end of June 2021, the balance of non-performing loans in the real estate industry of Industrial and Commercial Bank of China, China Construction Bank, and Bank of Communications were respectively 31.911 billion yuan, 11.564 billion yuan and 6.461 billion yuan, an increase of 15.673 billion yuan from the end of last year. 100 million yuan, 2.553 billion yuan, and 1.75 billion yuan; the non-performing loan ratios of the real estate industry were 4.29%, 1.56%, and 1.69% respectively, up 1.97 percentage points, 0.25 percentage points, and 0.34 percentage points from the end of last year.

The real estate non-performing loans of some joint-stock banks also experienced a "double rise." For example, as of the end of June 2021, the non-performing real estate loan ratios of China Merchants Bank, Minsheng Bank, and Ping An Bank were 1.07%, 1.04%, and 0.57%, respectively, an increase of 0.77 percentage points, 0.35 percentage points, and 0.36 percentage points from the end of last year.

Compared with large state-owned banks and joint-stock banks, credit risks in the real estate industry have a more obvious impact on small and medium banks, especially city commercial banks. As of the end of June 2021, the non-performing loan balances in the real estate industry of Bank of Ningbo and Bank of Shanghai were 537 million yuan and 4.716 billion yuan respectively, an increase of 35 million yuan and 969 million yuan from the end of last year; the real estate industry's non-performing loan ratios were 1.48% and 2.73% respectively , An increase of 0.11 percentage points and 0.34 percentage points from the end of last year.

I recently posted Taper This! 2014 Rhymes: Evergrande Goes Down, Real Estate Price Controls, Cash Moving into Stocks. There are links to old posts from 2014, when the Fed was tapering and China was slowing. Ride the cycles.