China Cinda Asset Management Co. Ltd. (01359.HK), which helps Chinese lenders manage bad loans, expects banks and some non-financial institutions to see higher non-performing loans (NPLs) as the country undergoes economic reform, chairman Hou Jianhang said Friday.
“NPLs in the banking sector have been expanding during the past two years… we expect them to continue to mildly climb in the coming years,” Hou told a press conference in Hong Kong.
Cinda will continue to mitigate risk from distressed assets by buying more NPLs from large corporates and picking up bad assets of real estate companies, although such a move might hurt its profit margin, he said.
Distressed assets by non-financial enterprises accounted for 54.4 percent of NPLs in 2013 while those of financial institutions took up the rest, Cinda said in a regulatory filing Thursday.
NPLs in the real estate sector made up 60.3 percent of the total, down from 68.4 percent a year earlier. Meanwhile, the proportion of NPLs in the manufacturing sector increased to 5.6 percent from 3.7 percent.
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