Bad consumer loans emerge as new headache for Chinese banks

  

Bad consumer loans emerge as new headache for Chinese banks



TOKYO -- Souring loans to retail customers have emerged as the latest headache for Chinese lenders already plagued by the country's real estate woes, at a time when the government aims to stimulate consumption through increased borrowings.

Chinese banks are experiencing a surge in consumer bad loans, with significant increases reported for personal loans at large state-owned lenders and even steeper rises at smaller regional banks. This trend is driven by sluggish domestic demand, a challenging economic environment, high household savings rates coupled with a lack of spending confidence, and the lingering effects of factors like US tariffs. The situation is concerning because it puts pressure on bank profitability, particularly when combined with low loan margins, and complicates efforts to boost economic recovery.