Moody's Sounds Alarm On Smaller Chinese Banks

On the surface, the picture for Chinese banks is improving, particularly for larger banks. Delinquent loan ratios are down as are “special mention” modification cases and loan loss reserves look positive, an April 19 Moody’s report pointed out. The story for smaller banks is different, as the rating agency nonetheless maintains “bias to the downside” on the category.

Large and small Chinese banks move in different directions

The 2016 financial performance for China’s 11 largest banks – dominated by five state-owned banks, and six joint-owned national banks – was generally positive. The smaller, independent banks, however, unable to compete with the lower...