Chinese banks seek to offload US$8.2 billion in bad credit-card loans

Chinese commercial banks are accelerating efforts to dispose of non-performing credit-card loans to clean up balance sheets amid a slowing economy. So far this year, approximately 130 notices have been disclosed on the Banking Credit Asset Registration and Circulation Centre seeking buyers for bulk transfers of troubled consumer debt, totaling more than 55 billion yuan (US$8.2 billion).

Major lenders involved in these disposals include China Everbright Bank, Shanghai Pudong Development Bank, Ping An Bank, Agricultural Bank of China, China Construction Bank, and Bank of China. Notably, China Everbright Bank listed 10.82 billion yuan of non-performing assets in July, while Shanghai Pudong Development Bank recently put up portfolios totaling about 7.2 billion yuan.

The surge in debt transfers coincides with broader economic challenges, including a drop in GDP growth to 4.3 percent in the second quarter. While strategic industries and exporters continue to absorb credit, domestic demand remains weak, with retail sales rising by only 1 percent and real estate investment seeing significant declines. This imbalance has led to aggressive competition among banks for assets, occasionally driving rediscount rates on commercial bills to near-zero levels.