Investigating Bank Bad Debts: Real Estate and Personal Loans Remain High-Risk Areas

Data shows that as of the end of June, the overall non-performing loan ratio of 42 listed banks has improved, with only seven banks, including BANK OF GUIYANG and MINSHENG BANK, experiencing a slight rebound compared to the end of last year. However, it is noteworthy that the real estate industry remains one of the sectors with a high non-performing loan ratio among commercial banks, with some urban and rural commercial banks and individual joint-stock banks showing a significant increase in the non-performing loan ratio for real estate loans. In terms of retail credit, many banks have seen an increase in the non-performing indicators for personal consumption loans, credit cards, business loans, and housing loans. It is particularly concerning that personal housing loans, which have traditionally been regarded as high-quality assets by banks, are now experiencing a rising non-performing ratio. This is especially true for the six major state-owned commercial banks, where the non-performing loan ratios for personal housing loans have all increased. Specifically, the non-performing loan ratios for personal housing loans at Industrial and Commercial Bank of China, Agricultural Bank of China, China Construction Bank, Bank of Communications, Bank of China, and Postal Savings Bank of China are 0.86%, 0.77%, 0.76%, 0.75%, 0.74%, and 0.73%, respectively, which have increased by 0.13, 0.04, 0.13, 0.17, 0.13, and 0.09 percentage points compared to the end of 2024. What are the reasons for the rise in the non-performing loan ratio of personal housing loans? Some analyses suggest that first, the slowdown in residents' income growth directly affects their ability to repay housing loans and other debts. Second, there is downward pressure on the real estate market. Factors such as fluctuations in housing prices and shrinking transaction volumes create uncertainty regarding the value of mortgaged properties, leading some borrowers to choose to default due to changes in psychological expectations or economic pressure. Additionally, some banks, in the process of expanding their credit business, have overly pursued scale and market share, relaxing their review standards for borrowers and reducing the rigor of risk assessments