China's AgBank's H1 property bad loans jump 19per cent

SHANGHAI :Agricultural Bank of China Ltd (AgBank), the country's third-largest commercial lender by assets, said on Monday that the value of its property bad loans rose 19per cent in the first half of this year.

AgBank's non-performing loan ratio for the sector hit 3.97per cent at the end of June, compared to the bank's overall NPL ratio of 1.41per cent, it said.

Despite this, the bank would continue to support lending to the property sector.

"We will not blindly recall, suspend or suppress loans," AgBank Vice President Zhang Xuguang told a press conference after the bank's half-year results.

"And we will support and cooperate with local governments to ensure the delivery of property projects," he added.

Smaller peer Bank of Communications on Friday warned of liquidity risks in the Chinese property sector amid a gloomy first half in which rising developer defaults halted housing projects, leading to mortgage boycotts.

Property investment, home sales and new construction are plummeting as the problems scare off potential buyers.

AgBank Vice President Lin Li said 1,112 property projects risk being unfinished, involving 1.23 billion yuan (US$177.82 million) of overdue mortgage payments, accounting for 0.023per cent of the lender’s total outstanding mortgages.

Property NPLs hit 33.5 billion yuan at the end of June, up from 28.2 billion yuan at the end of last year, according to the bank's half year report.

Despite property sector problems and COVID-19 lockdowns, AgBank's first half net profit rose 5.5per cent from a year earlier to 128.9 billion yuan, the bank said.

The bank said its net interest margin - a key indicator of bank profitability - was 2.02per cent at the end of June, compared with 2.09per cent at the end of March, though it warned at the press conference that the margin was likely to fall further in the second half.

Its overall 1.41per cent non-performing loan ratio at the end of the second quarter was unchanged from the end of the previous quarter.

(US$1 = 6.9173 Chinese yuan renminbi)

(Reporting by Ziyi Tang and Engen Tham; Editing by John Stonestreet, Bradley Perrett and Susan Fenton)