Key facts
- Most of China's listed banks reported an increase in nonperforming retail loans in the first half of 2026.
- The rise in delinquencies is attributed to tighter risk-classification standards and weakening household repayment capacity.
- Banks are increasing impairment provisions and engaging in bulk transfers of troubled consumer debt.
- The property sector's woes are contributing to the spread of credit problems.
- Nonperforming loans at four major state-owned Chinese banks totaled 1.202 trillion yuan ($164.8 billion) in the first half of 2023.
Most of China's listed banks reported an increase in nonperforming retail loans in the first half of 2026. This deterioration in asset quality is attributed to tighter risk-classification standards and weakening household repayment capacity. The trend is prompting lenders to increase impairment provisions and step up bulk transfers of troubled consumer debt, which is adding pressure to the profitability of joint-stock banks amid slowing economic growth. Credit problems in the property sector are also predicted to worsen, contributing to the rise in bad loans. In the first six months of 2023, nonperforming loans at four major state-owned Chinese banks reached 1.202 trillion yuan ($164.8 billion).