Bad loans rise at Chinese state banks ahead of $69bn capital injection

Interest margins fall to record lows amid deflationary pressure

China's "big four" state banks have been under pressure for years, since tighter rules triggered a property downturn that has sapped consumer confidence. (Source photos by Mizuho Miyzaki, Takaki Kashiwabara and Reuters)

WATARU SUZUKI, KENJI KAWASE and PEGGY YE

March 28, 2025 21:44 JST

SHANGHAI/HONG KONG -- Bad loans ticked up, interest margins shrunk and consumer loans were stagnant at China's biggest state-owned banks in 2024, underscoring mounting challenges facing the financial sector as the government readies a 500 billion yuan ($69 billion) capital injection.

Executives at China's "big four" state lenders -- Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China and Bank of China -- said net interest margins (NIMs) will continue to come under strain this year as the central bank plans further rate cuts to battle deflationary pressure.