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Banks Risk Management Practices Improve

Banks Risk Management Practices Improve

The risk resilience and risk management practices of Chinese banks are improving, the Xinhua News Agency cited the country's chief banking regulator as reporting.

By the end of September 2005, 35 banks had met the regulatory capital requirement of 8 percent, an increase of 5 percent from the beginning of the year, said Chairman Liu Mingkang of the China Banking Regulatory Commission.

These banks owned 68.1 percent of the total banking assets in China, an increase of 20.6 percentage points during the same period, he said.

Liu said that in 2005, the China Banking Regulatory Commission adopted three new tools to strengthen its supervision over banks non-performing loans: the use of peer group comparisons, assessing deviations in the accuracy of loan classifications and tracking the migration of loans of different categories.

At the end of September, the non-performing loans of all commercial banks in China  totalled 1.3 trillion yuan (US$160 billion), down 550.2 billion yuan (US$68.13 billion) from the beginning of the year, and the non-performing loan ratio dropped by 4.3 percentage points to 8.6 percent, falling to a one-digit level for the first time.