At the 2026 interim results conference held on August 28, Bank Of Communications Co.,Ltd. (SH: 601328) Deputy Governor Gu Bin stated that the bank's asset quality has remained largely stable so far this year. The group's non-performing loan (NPL) ratio stood at 1.30%, unchanged from the end of the first quarter but up 0.02 percentage points from the end of last year.
Breaking down the performance by segment, Gu noted that the quality of corporate loans continued to improve, with the NPL ratio dropping to 1.05%, a decrease of 0.14 percentage points from the end of last year. Within this, both the NPL balance and ratio for corporate real estate loans declined from the year-end figures, with the ratio falling by 0.9 percentage points to 3.30%. He added that the collateral backing these real estate loans remains relatively robust compared to industry peers.
The asset quality of the overseas segment also continued its stable improvement trend, achieving a dual decline in both the NPL balance and ratio. Conversely, the retail lending segment faced more pressure, with the NPL ratio rising to 2.0%, an increase of 0.4 percentage points from the end of last year. However, looking at the trend of new NPL formation on an annualized basis, the pace has slowed, with the group's new NPL ratio for the first half of the year falling compared to the first quarter.
From the group's current operational and management perspective, the primary risk areas under close watch are retail loans and corporate real estate. For the corporate real estate sector, Gu said the bank will continue to implement national policies aimed at the stable and healthy development of the property market, adhering to a principle of city-specific and category-based management. For key risks, the bank is promoting the resolution of existing risks on a case-by-case basis, enhancing dynamic monitoring with a focus on individual projects.
Gu emphasized that the bank is leveraging its role as a major state-owned bank, and will utilize policy tools such as maturity extensions, loan renewals, and continued lending under the white-list mechanism to ensure stability in its corporate real estate loan portfolio. Regarding retail loans, Gu admitted that asset quality in this area has been under pressure. "From an asset quality perspective, major banks have seen rising NPL and delinquency rates in personal loans over the past two years. We have been experiencing this pressure as well this year, and the industry-wide retail loan asset quality is generally under strain," he said.
By product type, the NPL ratios for residential mortgages, personal business loans, and consumer loans have seen some increase this year due to factors like borrowers' repayment ability and willingness. However, the pace of increase is slowing, with some mortgage NPL growth rates decelerating notably. The credit card business continues to face asset quality pressure, partly due to the impact of personalized installment policies. As a result, the bank's overall retail NPL ratio reached 2.02% by the end of June, up 0.44 percentage points from the start of the year, driven mainly by consumer loans, business loans, and credit cards.
In response to these trends, Gu noted that Bank Of Communications Co.,Ltd. launched a special action plan in March to enhance the quality of its retail assets. "The plan focuses on two fronts: improving the quality of new business and strengthening the management of existing portfolios," he said. For personal loan risks, the bank is balancing business development with risk management, guiding the whole bank to adopt a proper performance perspective and drive high-quality growth in the personal loan business.
"We are primarily using disposal methods such as cash collection, securitization, bulk transfers, and write-offs. In the first half of the year, our performance in clearing and disposing of non-performing retail loans improved significantly compared to last year. We are continuing to strengthen control over retail loan asset quality and will keep advancing the measures initiated under the March action plan," Gu stated.
Looking ahead, Gu said the bank will further bolster risk prevention across the entire personal loan process, iteratively enhance its risk control models and strategy systems, strengthen anti-fraud joint defense efforts, and continuously improve its collection system infrastructure.
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