China's bad debt ratio rises to five-year high in 2014

BEIJING (Reuters) - The bad debt ratio of Chinese banks climbed to 1.6 per cent as of the end of 2014, government data showed on Friday, a level not seen since the global financial crisis and underscoring building financial pressures as China's economy cools.

The non-performing loan ratio rose to 1.64 per cent in the fourth quarter, up from 1.16 per cent at the end of September, the China Banking Regulatory Commission said.

China's bad debt ratio stood at 1.66 per cent in the third quarter of 2009.

The rise in the bad debt ratio is the latest sign of the challenges faced by the world's second-largest economy.

Data this week showed China's economic growth plumbed a 24-year low in 2014 as a cooling housing market and a downturn in investment and manufacturing dragged on activity.

Separate government and corporate data have shown that companies are delaying their debt repayments as business slowed.

Yet, in a bid to shore up economic activity, Chinese authorities have been funnelling more cash into banks to spur lending.

The central bank pumped 50 billion yuan (S$10.75 billion) worth of short-term loans into banks on Wednesday, its second cash injection in as many weeks to encourage lending to farmers and small businesses.

Banks' capital adequacy ratio, a measure of the level of protection offered to depositors, stood at 12.9 per cent at the end of November. The regulator did not say what the figure was as of the end of December.

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