China bank assets grow 8% in Q1 despite rise in bad loans

Assets of large commercial banks grew faster than that of join-stock commercial banks.

Assets held by China’s banking institutions rose 8% year-on-year in Q1 2026, with large commercial banks assets’ rising double-digits whilst joint stock banks grew at a slower pace.

Total RMB and foreign currency assets in China’s banking institutions reached $72.81t (RMB494.7t) during the quarter, according to data from the National Financial Regulatory Administration (NFRA) of China.

Assets of large commercial banks grew 10.6% YoY to $32.31t (RMB219.5t) and accounted for 44.4% of the total.

Assets of joint-stock commercial banks expanded by 5.4% YoY to $11.72t (RMB79.6t) and accounted for 16.1% of the total, thet NFRA said.

Loans to micro and small enterprises (MSEs) grew 9.9% YoY to $5.71t (RMB38.8t) during the period, whilst agriculture-related loans rose 9.5% YoY to $2.21t (RMB15t).

Asset quality was “stable”, according to the NFRA, with outstanding loans at $35.21t (RM239.2t).

The outstanding balance of non-performing loans (NPLs) of commercial banks increased by $25.64b (RMB174.2b) to $544.59b (RMB3.7t) in Q1.

The NPL ratio of commercial banks was 1.51%, inching up 0.02 percentage points compared to the end of the previous quarter.

An earlier report by Natixis Asia Research noted how the Chinese government’s recent support measures have boosted banks’ capital adequacy ratios, but may also be masking asset quality issues.

“Chinese banks no longer generate organic capital due to lower profitability and asset quality issues,” said Alicia Garcia Herrero, Natixis CIB chief economist for APAC & Middle East; and senior economist Gary Ng.

“We estimate that China has swapped $606.46b (RMB4.1t) and $576.88b (RMB3.9t) in debt in 2024 and 2025, which has lifted the capital adequacy ratio by 19 bps and 13 bps respectively,” said Garcia Herrero and Gary Ng.

“Without government help, the capital adequacy ratio would have fallen in 2024,” Garcia Herrero and Ng said.

(US$1 = RMB 6.79, as of 8 July 2026)