China Banking Regulatory Commission (CBRC) statistics showed that non-performing loans for the country's major commercial banks stood at 1.2 trillion yuan (US$152 billion) by the end of September, 46.9 billion yuan (US$5.9 billion) lower than at the end of 2005.

The bad-loan ratio was 7.6 per cent, 1.3 percentage points lower than the end of last year.

The combined non-performing loans of five State-owned banks fell 1.2 percentage points to 1.1 trillion yuan (US$139 billion), or 9.3 per cent of total lending, by the end of last month.

Twelve joint-stock banks had total outstanding bad loans of 116.8 billion yuan (US$14.8 billion), 30.5 billion yuan (US$3.9 billion) lower than at the end of 2005. The bad-loan ratio of joint-stock banks fell 1.3 percentage points to 2.9 per cent.

The figures show that the banking sector has made progress in improving risk management and that the government's push to tighten lending has taken effect, the CBRC said.

In recent months, the government has repeatedly urged domestic banks to be cautious about lending to sectors that face overcapacity.

"The banks should continue to restrain the pace of lending growth," Liu Mingkang, the CBRC's chairman, said at its meeting yesterday.

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