Biggest Chinese banks' bad-loan challenge may finally be easing

SHANGHAI/HONG KONG (March 31): The bad-loan challenge for China’s biggest banks, which worsened steadily over much of the first half of the decade, may finally be easing.

Earnings reports this week from Industrial & Commercial Bank of China Ltd., China Construction Bank Corp. and Agricultural Bank of China Ltd. showed that their provisions for losses on bad loans stabilized last year, helping them to post higher-than-estimated profits.

The lenders’ bad-loan ratios either declined or, in ICBC’s case, held steady, a sign that the banks benefited from a rebound late last year in the world’s second-biggest economy. That’s a welcome change for an industry that has been contending with loan defaults, narrower margins and tighter regulations on mortgage lending and off-balance sheet wealth-management products.

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