Bank of East Asia, China Construction Bank earnings marred by rise in bad loans to mainland’s distressed property sector
- Bank of East Asia’s non-performing loans in China rose by 0.4 percentage points to 3.15 per cent of its total lending in the first half
- China Construction Bank’s bad loans to China’s real estate sector climbed 18 per cent at the end of June compared with December
China’s worsening property crisis is spilling over to financial institutions, forcing banks to increase bad-debt provisions arising from the sector.
Bank of East Asia, Hong Kong’s largest family-owned lender, said its non-performing loans ratio in China rose by 0.4 percentage points to 3.15 per cent of its total lending in the first half.
“The business environment of the group faced multiple headwinds and challenges, including troubled property developers amid the struggling real estate sector on the Chinese mainland, concerns over US and European bank failures, and global economic uncertainties under [rising] interest rates and inflationary pressures,” BEA’s co-CEOs Adrian Li Man-kiu and Brian Li Man-bun said in a statement in a filing to the Hong Kong stock exchange on Thursday.
“BEA China continued to manage its asset quality through the gradual exit of high-risk accounts and proactive recovery efforts,” the statement added.
China Construction Bank (CCB), the first of the nation’s five biggest lenders to report its interim profit, extended 833 billion yuan (US$114.6 billion) of loans to the real estate sector, an increase of 8.1 per cent from the end of 2022 as the bank pledged to support developers.
