Respondents of the survey include 1,328 bankers from 116 financial institutions across the country. (Photo : Getty Images)
A survey released by the China Banking Association and PwC Beijing revealed that loans obtained by industries stuck in overcapacity were the greatest credit risk Chinese banks handled in 2015, according to a report by China Daily.
These industries include shipping, iron, cement and steel.
While 82.1 percent of bankers pointed at such industries as the greatest credit risk they faced in the previous year, 57.6 percent of respondents thought of loans taken by small and micro enterprises.
As for primary market risks, 82.3 percent of respondents considered the country's liberalization of interest rates. 55.6 percent pointed at the increase of capital market volatility.
Adjustments to China's monetary policy was considered the primary market risk for 55.6 percent of respondents, while the fluctuating exchange rates of the renminbi accounted for 50.1 percent.
Respondents of the survey include 1,328 bankers from 116 financial institutions across the country.
Risk management is expected to become the top priority for the banking sector in the coming years. According to Ba Shusong, chief economist and project leader of the survey, over 40 percent of bankers forecast that the non-performing loan (NPL) ratio for the next three years will be somewhere between 1 percent and 3 percent.
Meanwhile, data from the China Banking Regulatory Commission indicate that the NPL ratio for commercial lenders increased by 1.59 percent, which reflects a jump of 43 basis points year on year. The report stated that outstanding NPLs amounted to 1.19 trillion yuan ($181 billion), a 55-percent increase from the previous year.
To successfully avoid or overcome future risks, Wu Weijun, the chief partner of PwC Beijing, advised commercial banks to pull an adequate number of loan loss provisions.
When asked whether they are optimistic about profit earning efficiency for the next three years, most bankers don't expect much, with most of the respondents only expecting an annual profit growth of under 10 percent.
As for sectors that will make the most contributions to a bank's profit growth, 30 percent of respondents listed increase of interest-bearing assets and the development of a bank's intermediary business as the two primary drivers for profit increase.
