China's property crisis is bleeding into its banking sector, which is being asked to prop up developers

A residential area in Nanjing, East China's Jiangsu province, on January 29, 2024.

Costfoto/NurPhoto/Getty Images

• China's property crisis has impacted the country's biggest banks, increasing non-performing loans.
• Beijing is urging banks to boost financing for "white list" property developers to help the sector.
• Despite the crisis, Chinese banks say they have sufficient buffers to manage risks.

China's property crisis has hit the books of its biggest lenders, which are reporting an uptick in non-performing loans.

Non-performing loans at China's big four banks — Industrial and Commercial Bank of China, Bank of China, China Construction Bank, and Agricultural Bank of China — jumped 10.4% in 2023, from 1.117 trillion Chinese yuan, about $155 billion, in 2022 to 1.23 trillion yuan.

This is according to a Nikkei analysis based on the companies' earnings, which were released this week.

The banks were all profitable last year, but their margins are being increasingly pressured by the fallout from China's real-estate debt crisis.

Even so, Beijing is urging banks to boost financing for property developers featured on a "white list" of companies.

China's real-estate sector has been mired in crisis since the second half of 2021, when a liquidity crunch at Evergrande — once China's second-largest developer — came to light.

Evergrande is now in liquidation, while other Chinese real-estate developers have run into similar issues and have begun defaulting on their bond payments, spurring fears the crisis could spill over into other sectors of the economy, and globally.

Despite the rise in bad loans, Chinese lenders said they had enough buffers to weather the storm and will control lending risks to property developers, per Nikkei.

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