S&P forecasts slight increase in CCB's NPA ratio

The slow growth will be due to problematic property loans and higher loan ratios.

S&P Global projects China Construction Bank’s (CCB) non-performing asset ratio will inch up to 4.48% in 2024 from 4.40% in 2023, with estimates including forborne and other problem assets.

S&P said that this slow growth will be caused by problematic property loans and higher reported special-mention (SPL) and non-performing (NPL) loan ratios following the new asset classification rules.

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The agency noted that in 2023, CCB reported an unchanged NPL of 1.37% while the SML slipped to 2.44% from 2.50% by end-June. 

On the flip side, CCB’s NPL ratio in 2H2023 rose 88 basis points to 5.64% and property loans remained a small portion of the total loans at 3.6% by end-2023, resulting in a 10.8% loan growth in 2023.

S&P Global expects tighter NIMs to continue to constrain profitability amidst CCB’s ongoing shift to corporate sectors due to consecutive cuts in interest rates and the government’s push for banks to lower their lending rates to support the real economy. In 2023, CCB reported a lower NIM of 1.70%, down from 2.01% a year ago.