Wenzhou Banks' NPL Ratio Surges 370%, Borrowers Feel Squeeze


Banks in Wenzhou had a non-performing loan (NPL) ratio of 1.74 percent at the end of February, the eighth month in a row the ratio has growth, reports China Securities Journal, citing a report by the Wenzhou branch of CBRC.surged 370.27 percent from a low of 0.37 percent at the end of June 2011. 

At the end of February, banks in Wenzhou had total NPLs of 11.24 billion yuan, or 2.55 billion yuan more than at the start of 2012 and 1.79 billion yuan more than at the end of January.

The highest amount of NPLs at a single bank was 2.09 billion yuan, though the bank was not named.

According to a survey by Shenyin Wanguo Securities, a majority of respondents expect Wenzhou's NPL ration to hit two percent in 2012, and might hit five percent if the economy slows dramatically.

It was also reported that several local banks have raise their acceptable level for NPLs to between one percent and two percent of all loans, with some raising their level to three percent.

The sharp rise in the NPL ratio has had a major impact on the ability of borrowers to take out loans, said a source at a local commercial bank. Almost all banks are tightening credit granted to small and medium enterprises and have halt loan extensions to real estate developers, said the source.

At present, Wenzhou has a total of 1,330 financial institutions, the highest number for any city in Zhejiang province.

During first two months, Wenzhou banks granted 7.51 billion yuan worth of new loans, 9.44 billion yuan less than a year before


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