(Yicai) Sept. 15 -- Major listed Chinese banks reported further improvement in the quality of corporate loans in the first half along with a general increase in bad loan ratios for personal borrowing, with credit card businesses showing particularly high levels of stress, according to their most recent financial reports.

Corporate non-performing loan ratios at all six big state-owned banks fell to varying degrees in the six months ended June 30. Industrial and Commercial Bank of China and Bank of Communications recorded the best improvements, with declines of 0.1 percentage point and 0.14 point, respectively, from the end of last year.

Among seven listed joint-stock banks that have disclosed comparable data, corporate NPL ratios either declined or remained unchanged from year-end.

NPL ratios for retail lending, which includes mortgages, consumer loans, credit cards, and personal business loans, generally worsened. The ratios among the six state-owned banks rose between 0.05 point and 0.44 point, reaching between 1.31 percent and 2.02 percent.

Of the eight listed joint-stock lenders that disclosed comparable data, only Ping An Bank’s year-end NPL ratio for the personal loan business remained unchanged from the end of the previous year, while that of the other seven rose to varying degrees, and half of them surged to over 2 percent. Huaxia Bank and CZBank rose the most to 2.85 percent and 2.93 percent, respectively.

Huaxia Bank attributed the increase partly to a “decrease in the ability and willingness to repay among some customers,” according to its earnings report.

Among the big state-owned banks, Agricultural Bank of China was the only one that had a lower NPL ratio for personal housing loans from the end of last year, down 0.03 points. ICBC and Bank of China both reported lower NPL ratios for consumer loans, while ICBC was the sole major state bank to post an improvement in operating loans, down 0.01 point from the end of last year.

At the end of the first half, commercial banks had CNY241.5 trillion (USD36 trillion) of performing loans, per figures released by the National Financial Regulatory Administration last month. NPLs totaled CNY3.7 trillion (USD551 billion), up CNY52.3 billion (USD7.8 billion) from the end of the first quarter, while the NPL ratio rose 0.01 point to 1.52 percent.

Credit card lending remains a particular area of concern. Excluding Postal Savings Bank of China, whose credit card NPL ratio was unchanged at the end of the first half from year-end, the other five big state banks all reported significant increases.

At ICBC, the ratio jumped 0.76 point to 5.37 percent. BoComm reported a rise of 1.12 point, and for some joint-stock banks ratios leapt above 4 percent.

Despite ongoing pressure on retail credit quality, executives at a number of banks said the pace of deterioration was slowing. Some expect risk levels in certain businesses to peak within this year.

The overall quality of China Citic Bank’s retail assets is expected to stabilize and improve in the second half, according to Jin Xinian, a vice president and risk director at the lender. He added that steps already being taken should allow credit card business risk to be largely cleared by the end of 2026.

Jin said the remaining NPL strain is concentrated mainly in operating loans secured by property. With China’s real estate market still in the process of finding a bottom, it will take time for banks to resolve the risks associated with these loans, he noted.

Editors: Tang Shihua, Tom Litting