BEIJING (Reuters) - China's commercial banks posted an average non-performing loan (NPL) ratio of 1.59 percent as of the end of September, the highest since the 2009 global financial crisis, an official at the country's banking regulator said late on Wednesday.
The provision coverage ratio for Chinese commercial lenders also dropped to a six-year-low of 167.7 percent at end-September, compared with 247.15 percent a year earlier, said Liao Yuanyuan, deputy head of policy research bureau at the China Banking Regulatory Commission (CBRC).
Chinese lenders are struggling with mounting soured debts as growth in the world's second-biggest economy continues to slow. Bank profits have been squeezed further by six interest rate cuts over the last year and the ongoing liberalisation of interest rates.
China's top five lenders last week reported their slowest third-quarter profit in at least three years.
Industrial and Commercial Bank of China Ltd (ICBC), the country's biggest lender by assets, booked an NPL ratio of 1.44 percent at end-September, from 1.4 percent at end-June. China's other big state-owned lenders also reported higher NPL ratios.
"The regulator has anticipated the current level and trend of NPLs," Liao of the CBRC said at a press conference.
"It's reasonable and within our expectation," she added.
China's biggest banks, including ICBC, are seeking to loosen the regulatory requirement on provisions. The CBRC's current provision requirement of minimum 150 percent is "relatively high compared with international standards", said an ICBC executive last week on an earnings call with analysts.
ICBC's provision coverage ratio has dropped to 157.63 percent, nearing the CBRC's minimum requirement. At the end of 2014, the bank booked a provision coverage ratio of 206.9 percent.