Several mainland banks in China have reported a contraction in personal loan business and a continuous rise in non-performing loan (NPL) ratios in their 2025 annual reports. The data indicates that the volume of non-performing personal loans transferred increased by 85% last year. As March began, there was a sudden surge in the transfer of non-performing assets in the personal loan segment within the banking industry, with assets showing characteristics of short account age and high discount rates.
Moreover, due to the accelerated exposure of long-term accumulated credit risks, banks are intensively disposing of non-performing assets while also increasing capital.
As reported by “First Financial” on Monday, by March 27, major commercial banks such as Industrial and Commercial Bank of China (ICBC), China Construction Bank, Bank of Communications, Postal Savings Bank of China, China Merchants Bank, Ping An Bank, China Minsheng Bank, and CITIC Bank, disclosed their 2025 annual reports, with most indicating a continuous rise in NPL ratios.
ICBC and Bank of Communications both saw their NPL ratios rise to 1.58%, an increase of 0.43 percentage points and 0.5 percentage points respectively from the end of 2024.
Simultaneously, personal business loans in banks are also contracting. By the end of 2025, among major state-owned banks, the proportion of personal loans at ICBC had dropped to below 30%, while it declined to the edge of 50% at Postal Savings Bank of China. Additionally, the credit card business balances of these eight banks saw varying degrees of decline by the end of last year.
Among them, ICBC, Postal Savings Bank of China, and China Minsheng Bank all experienced credit card business declines of more than 10%, while Ping An Bank saw a decrease of 6.79%.
The downturn in the real estate industry, leading to dampened housing loan demand and early repayments, is a key factor contributing to the contraction of personal loan business. Wang Jingwu, Vice President of ICBC, stated in a performance meeting that due to various factors such as economic transformation, adjustments in the real estate market, and temporary supply-demand imbalances, the bank’s personal loan NPL ratio has entered an upward trend.
In a recent report by “Economic Information Daily,” according to analysis and statistics by Guotai Junan Securities, based on data from the Credit Asset Registration and Transfer Center of China’s banking industry (referred to as the “Credit Registration Center”), the total announced amount of outstanding principal and interest of non-performing loan transfers in 2025 reached 432.9 billion yuan, a significant increase of 58.8% compared to 2024.
Looking at the quarterly trends, the announced outstanding principal and interest of non-performing loans in each quarter of last year were 68.2 billion yuan, 88.2 billion yuan, 98.6 billion yuan, and 177.9 billion yuan, respectively.
Among these, the transfer volume of non-performing personal loans increased significantly by 85% year-on-year, becoming a major driver of growth.
In the composition of non-performing loan transfers in 2025, credit card loans and personal consumption loans accounted for 32.2% and 38.2% respectively, while the corresponding proportions in 2024 were 20.5% and 32.3% respectively. Regarding the sources of supply, the listed business volumes of state-owned banks and consumer finance companies showed a significant increase, with state-owned banks mainly focusing on credit card business, while consumer finance companies concentrated more on personal consumption loans.
Unlike the long-digesting “bad debts” from previous transfers, the emerging asset packages in the current market exhibit distinct characteristics of “short account age” and “high discount rates.”
According to a notice from China Construction Bank’s Guangdong Branch regarding the third phase of personal non-performing loans (personal business loans) transfer in 2026, the total outstanding principal and interest of the asset package amounted to 2.22 billion yuan, with a weighted average overdue days of 145.47 days, indicating relatively short-term delinquencies.
Asset packages of personal non-performing loans are typically sold at a significant discount. Based on statistics from United Credit, the average discount rate for personal non-performing loans in the first quarter of 2025 was approximately 4.1%. Recently, Jinshang Bank announced that a batch of non-performing assets involving eight corporate clients, with a book value of 1.421 billion yuan, was transferred to its affiliate Jin Yang Asset Management for 310 million yuan, at a discount rate of 7.82%.
The discount rate is the percentage of the reduced amount in a commercial transaction after a price cut as compared to the original price, reflecting the extent of price concessions.
Since March, there has been a sudden rise in the non-performing asset transfer market. More than ten institutions, including Bank of China, China Construction Bank, Postal Savings Bank, Ping An Bank, Bank of Ningbo, and Bank of Zhongyuan, have intensively posted non-performing assets transfer notices at the Credit Registration Center. According to statistics, the number of non-performing asset packages launched in the month exceeded 150.
According to a report by “The Interface News,” on March 24, the Credit Registration Center updated a total of 15 non-performing loan transfer notices. Xingye Consumer Finance posted two personal non-performing loan transfer notices at the Credit Registration Center, with total outstanding principal and interest amounts exceeding 10 billion yuan each, resulting in a combined scale exceeding 20 billion yuan, involving over 20,000 loans already classified as “loss.”
On March 11, China Construction Bank released 10 non-performing loan transfer notices at once, involving multiple branches in Zhejiang, Henan, Jiangsu, and more. China Post Consumer Finance listed a personal consumption loan non-performing assets package with a total outstanding principal and interest of 919 million yuan on March 4. Chang Yin 58 Consumer Finance concentrated on four consecutive project listings on March 17, with a total outstanding principal and interest of 1.719 billion yuan. Huaxia Bank’s Beijing branch planned to transfer a batch of personal consumption loan receivables with a total amount of 824 million yuan, with a weighted average overdue days reaching 613 days.
From the beginning of 2026 until March 25, the Credit Registration Center had published over 370 notices of non-performing loan transfers.
While there is an intensive disposal of non-performing assets, the banking industry is also bolstering its capital. On March 16, the China Banking and Insurance Regulatory Commission highlighted the need to enhance the capital of large state-owned commercial banks. Following the issuance of 500 billion yuan in special government bonds in 2025 to recapitalize four major state-owned banks, it is planning to issue an additional 300 billion yuan in special government bonds in 2026 to support the capitalization of these banks.
Small and medium-sized banks are also increasing capital infusion. On March 10, Fujian Yongan Huifeng Village Bank was approved to raise its registered capital by 15 million yuan from HSBC in Hong Kong and Shanghai; on March 7, Chengdu Bank was granted an increase in registered capital from 3.736 billion yuan to 4.238 billion yuan. In February, Hubei Bank issued 1.8 billion shares to 53 corporate shareholders, raising funds of 7.614 billion yuan.
As reported by “Economic Information Daily,” Su Shang Bank’s special research analyst Wu Zewei stated that the accumulation of long-term credit risks is accelerating exposure, with high non-performing loans eroding profits and depleting capital bases. Under the dual pressure of the imminent shortage of capital adequacy ratio and the downward trend in asset quality, banks must simultaneously “detoxify” by shedding non-performing assets to improve their balance sheets while “infusing blood” to meet business expansion demands.
The disposal of non-performing assets may become a routine operation for the banking industry. Yang Haiping, a researcher at the Shanghai Institute of Finance and Law, mentioned that in the context of narrowing net interest margins and squeezed profitability, the banking industry’s ability to digest non-performing assets through profit accumulation is weakening.
This suggests that external “blood transfusion” support and internal “risk clearing” are likely to become the norm in the banking industry for a considerable period in the future.
Professor Sun Guoxiang from the Department of International Affairs and Business at National Hua University in Taiwan told the Epoch Times that the Chinese banking system is currently facing triple pressures: shrinking loan profits leading to weakened profitability, worsening asset quality due to accumulated risks in real estate and small-scale loans, and the exposure of risks for local governments and small banks with high loan exposure to local platforms and real estate.
Chinese issues expert Wang He informed the Epoch Times that the critical factor determining whether a systemic crisis will erupt lies in whether multiple crisis points in the Chinese banking industry erupt simultaneously. “If similar problems break out in many places across the country at the same time, the authorities won’t be able to cope, leading to a systemic financial crisis outbreak.”