MAY 22, 2009
Fitch Sounds Alarm on Chinese Lenders
By JASON LEOW
SHANGHAI -- Credit-ratings firm Fitch Ratings says China's banks are showing early signs of asset-quality deterioration amid a torrent of lending to help fund government stimulus projects.
New loans totaling 5.17 trillion yuan, or $757.5 billion, in the first four months of this year have already exceeded the 4.91 trillion yuan in loans made in all of 2008.
Amid the credit surge, government officials have warned of rising risks. Earlier this week, they announced rules to ensure money is going to the real economy, amid concerns that some loans were being diverted into the asset markets instead.
In a report on China's banks published Thursday, Fitch said it is seeing warning signals from the Chinese banking system. Chinese lenders have been downgrading more "special mention" loans, those that are considered about to default, to nonperforming status, marking them as bad debt, said Charlene Chu, a senior director at Fitch Ratings China and an author of the report.
Chinese banks also have been increasing provisions for losses on unimpaired loans, indicating that "the banks themselves see greater losses down the line in loans that are currently performing," Ms. Chu said.
The report added to earlier warnings from the credit rater that lending quality in China is weakening.
Fitch has long argued that figures such as low levels of nonperforming loans compared with total bank assets don't tell the full story.
It has pointed to items such as special-mention loans and a lack of transparency in the way banks categorize loans as poorly recognized risks. The latest report notes that the credit boom, coupled with the poor economy, is exacerbating those risks.
The report also noted that nonperforming-loan ratios at China-based foreign banks, usually thought to have higher risk-management standards than Chinese banks, have been rising.
Fitch said any impending credit crisis will be hard to spot in the short term given the high volume of lending. China's banks tend to roll over loans, or extend their maturities, when debts come due, distorting any assessment of lenders' asset quality, Ms. Chu told analysts Thursday.
Over time, though, the global economy's weakness and China's still-nascent domestic demand will take a toll on the banks, as corporate borrowers earn less and the likelihood of defaults rises, she said.
Printed in The Wall Street Journal, page C8
source: <a href='http://online.wsj.com/article/SB124288312709842515.html' target='_blank'>http://online.wsj.com/article/SB1242883 ... 15.html</a>
asset-quality deterioration
由于经济刺激计划中大量的借贷（及借贷风险控制存在的问题）导致资产质量下滑
to ensure money is going to the real economy
确保（贷款）真正注入经济产业中，（即是说银行放贷出的资金是用于生产建设而非资本市场如股市）
provisions for losses on unimpaired loans
unimpaired loans指非减值贷款，此句意指银行为非减值货款（存在的风险）增加贷款损失准备金，即调高坏帐拨备
down the line in loans
down the line here means 'in the future'，此句指银行觉察到当前放出/执行的贷款在（未来）无法还贷的可能性和比率增加了
nonperforming loans
nonperforming means 'not producing the expected return'，即指不良贷款，无法回收预期利益的贷款