PBC sees low NPL level for Chinese banks

Vice governor of China's central bank Pan Gongsheng on Wednesday dismissed concerns over bad loans given by Chinese lenders, adding that the banks' non-performing loans (NPL) remain low.

The total value of NPLs in the banking sector stands at less than 500 billion yuan (80 billion U.S. dollars), accounting for just 0.95 percent of total outstanding loans as of the end of 2012, Pan said at a press conference held on the sidelines of the legislature's ongoing annual session.

Pan said the asset quality of Chinese banks is generally good, given the low NPL ratio.

"It is normal to see the ratio fluctuate near low levels," said Pan, vice governor of the People's Bank of China (PBC).

At the end of 2012, the provision coverage ratio in the banking sector was 300 percent, meaning Chinese banks had reserved three times the amount of cash needed to cover potential losses due to exposure to bad loans, according to Pan.

"This indicates that the banking sector has a strong capability to fend off potential risks," he said.

Pan said he is confident that Chinese banks will maintain strong profitability in the future.

China's commercial banks will issue annual reports for 2012 beginning next week.