HONG KONG -- For China's banks, bad debt is a small but quickly growing problem. The outstanding balance of bad loans at the nation's four largest banks stood at 384.7 billion yuan ($62.6 billion) as of the end of June, up 13.2% from six months before.
With China's economy slowing, earnings among smaller companies are stagnating. This, combined with the souring property market, is taking a toll on lenders. Though bad loans make up only around 1% of total lending by China's banks, they are already putting a squeeze on profits.