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Many bad loans at China's midsize banks have ended up on the books of state-owned distressed asset management companies. (Source photo by AP) 
Market Spotlight

Chinese banks ditch bad loans amid property woes

Hundreds of billions of yuan in distressed assets were sold last year

KENJI KAWASE, Nikkei Asia chief business news correspondent | China

HONG KONG -- During their recently concluded earnings season, Hong Kong-listed Chinese banks sent a positive signal about their asset quality. Even as China's property market faltered, their nonperforming loan ratios -- which measure bad debts as a percentage of the total -- remained steady overall.

The reports of the Chinese banks also demonstrated the considerable financial engineering that was involved in keeping the ratios stable. Lenders last year sold off 2.7 trillion yuan ($392 billion) in NPLs, according to the mainland regulator, with many of the delinquent debts winding up on the books of state-owned distressed asset management companies that often absorb troubled credits in China.

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