BOC downgrades Suntech’s loan to NPL status

The Bank of China has downgraded the status of its loan to Suntech, a giant Chinese solar panel maker that filed for bankruptcy last week, to a non-performing loan, said the bank's president Li Lihui, the 21st Century Business Herald reported on Wednesday.

The provision for the Suntech loan is 50 percent, and the bank is particularly cautious about extending loans to industries suffering from overcapacity like the solar industry, Li said.

Earlier this year, the bank led a group of six Chinese lenders and filed a suit against Suntech for unpaid debts. Suntech had raised as much as $1.7 billion of mostly non-guaranteed loans from lenders including BOC, China Construction Bank, National Development Bank and Agricultural Bank of China by the end of 2011.

Li said during the bank's annual report release that loans going to the solar industry are relatively small in scale for the bank. And the non-performing loans rate in the sector is at 21.31 percent, which indicates a big pressure in capital in the solar industry.

BOC saw its 2012 net profit rise 11.51 percent year-on-year, reaching 145.5 billion yuan ($23.5 billion), according to its annual report released on Tuesday.

This was the slowest growth rate since 2006 for the nation's largest foreign-exchange bank.

The bank's non-performing loan rate declined 0.05 percent to 0.95 percent.

Li added that the group's net interest margin, a primary gauge of the bank's lending profitability, went up 3 basis points to reach 2.15 percent.