Wenzhou sees sharp increase in NPL for 8 months

(Ecns.cn)--The ratio of non-performing loans (NPL) made by banks in eastern China's Wenzhou city rose to 1.74 percent by the end of February, according to China Business News Monday.

The NPL ratio of financial institutions in Wenzhou had its first rise in 10 years last September as a credit crunch hit small business in this entrepreneurial hub, the paper said, citing unidentified sources.

There was some indication of coming trouble with loan repayments as early as last April, but the proportion has been continuously rising for eight months and relevant authorities say the disturbing trend is likely to continue.

The value of NPL at local financial institutions reached about 11.241 billion yuan (US$1.78 billion) in February, and that figure was 1.785 billion (US$283 million) up from January, according to a report by the China Banking Regulatory Commission, Wenzhou Bureau.

In response, all banks in Wenzhou have increased their tolerance for the NPL ratio, which ranges from 1 percent to 2 percent; some banks even stretched the proportion to 3 percent, according to the report.

Wenzhou, the economic hub of coastal Zhejiang Province, has over 1,330 financial institutions, making it the city with the heaviest financial network.