China Merchants Bank (CMB) saw a 4x jump in non-performing loans (NPLs) in 1H2021 to CNY 4.3bn ($664mn) in the period, up from CNY 1.19bn ($180mn) at end-2020 with its NPL ratio on such loans at 1.07% vs. 0.3%. Overall NPLs stood at 1.01% vs. 1.07% end-2020. Property developers accounted for 19% of their loan book with its total exposure to domestic real estate enterprises, including bond investments, rising 7% from end-2020 to CNY 643bn ($99mn) at end-June. Bloomberg reports that they are planning to reduce concentration of property loans and are “putting a strict curb” on loans to customers that they do not deem strategically important. Bloomberg adds that CMB is the first of the nation’s major lenders to report earnings adding that the lender was recently ‘fined for pumping cash into the property market in the disguise of operating loans’. Overall, the bank’s net income rose 23% YoY. It will now be interesting to see the exposure and results of other lenders in regard to China’s property sector in the coming weeks.

CMB’s 0.95% 2023s traded at 100.292 yielding 0.85% currently.

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