Among 23 major non-Chinese lenders, all but 6 reported an increase
in soured loans in the first half of 2015, the strongest indication
yet of how China's slowdown is infecting banks' balance sheets, data
compiled by SNL Financial for Reuters show.
That trend accelerated in the second quarter, the banks' data show.
"Second-quarter results have seen banks across Asia suffer rising
bad loans after a period of historic lows in NPL levels," said Josh
Klaczek, JPMorgan head of Asia financials research.
"China's slowing growth has particularly hit shorter duration
trade-related loans, but is likely to have a broader impact on
commodity credit, given its importance as an end-user."
The data indicate how banks regionwide are suffering even when, like
in Indonesia, they are not lending much directly to Chinese
companies, as trade across Asia stutters.
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Indonesian banks saw provisions against bad loans as much as triple
in the first half of 2015.
"Most of the Indonesian banks said their increasing non performing
loans (NPLs) are because of the mining and construction sectors,
which have been hit the most by slowing demand from China," said
analyst Syaiful Adrian at Ciptadana Securities.
The world's No.2 economy is officially targeted to grow at 7 percent
this year, but some economists believe it is expanding at a slower
pace. Data this month showed Chinese producer prices hit their
lowest point since late 2009.
Singapore's banks, which had boosted their China credit, were this
year hit by a drop in billions of dollars of China trade financing
deals as mainland borrowing conditions eased while offshore interest
rates widened.
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Hong Kong's Bank of East Asia said impairment losses had more than
doubled to HK$782 million ($100.83 million) in the first half and
warned its outlook looked challenging amid China's slowdown and a
stock market plunge.
In Thailand, bad loans at commercial banks rose in the second
quarter to their highest level since 2012, hit by a slowdown of Thai
exports, especially to China.
Mike Smith, CEO of Australia and New Zealand Banking Group, played
down on Tuesday concerns despite a 13 percent rise in bank bad debt
charges: "Is it going to get significantly worse? I don't think so."
(Additional reporting by Eveline Danubrata in Jakarta and Swati
Pandey in Sydney; Editing by Lisa Jucca)
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