Uptake of letters of credit (L/Cs) is increasing as non-performing loans (NPLs) at commercial banks continue to rise according to China’s top banking regulator.

Chairman of the China Banking Regulatory Commission, Shang Fulin, said he expects the amount of NPLs to continue to rise.

Central concerns
Shang said he was particularly concerned about increased risks in real estate finance and local government fundraising vehicles.

The value of NPLs in the first quarter has already reached 56 per cent of the total amount last year, Shang reportedly told a financial industry teleconference discussing the condition of China’s economy and financial industry.

L/C usage
He also said during the teleconference that L/C usage was on the rise.

The total value of NPLs at the end of the first quarter stood at 982.5 billion yuan (US$214.46 billion), up 139.9 billion yuan from the same period last year, bringing the bad loan ratio to 1.39 per cent.