Loan defaults dent bank incomes

A global credit squeeze, shrinking consumer demand and tumbling asset prices are likely to hit 2008 Chinese bank earnings hard, analysts said.

They have also based their estimate in part on a key provisioning requirement that the China Banking Regulatory Commission ordered last month.

On Jan 16, the banking sector watchdog had ruled that all domestic lenders must set aside at least 130 percent of the aggregate amount of shaky loans on their books for provisioning.