Core Viewpoint - The overall asset quality of the banking industry in China remained stable in the first half of 2025, with a slight decrease in the non-performing loan (NPL) ratio, although there were regional disparities in credit quality [1][2]. Summary by Sections National Overview - As of June 2025, 25 regions reported their NPL data, with 16 regions showing an increase in NPL ratios compared to the beginning of the year. However, most regions remained below the national average NPL ratio of 1.49%, indicating that risks are generally controllable [1][2]. - The major state-owned banks and joint-stock banks reported NPL ratios of 1.21% and 1.22%, respectively, both showing a decrease or stability compared to the beginning of 2025 [2][7]. Regional Performance - Regions such as Gansu, Shanghai, Heilongjiang, and Hebei achieved a reduction in NPL ratios, with Gansu's NPL ratio decreasing from 2.56% at the end of 2024 to 2.31% in mid-2025, a decline of 0.25 percentage points, and a reduction in NPL balance by approximately 4.7 billion [2][3]. - Shanghai's banking sector saw its NPL ratio drop from 1.02% at the beginning of the year to 0.90% by June, with a reduction in NPL balance of about 10.4 billion [3]. Areas of Concern - Six regions, including Guangdong, Zhejiang, and Jiangsu, experienced slight increases in NPL ratios, with Guangdong's ratio rising by 0.1 percentage points to 1.62% and an increase in NPL balance of approximately 32.7 billion [4][5]. - Inland regions like Guizhou and Sichuan also saw increases in NPL ratios, with Guizhou's ratio at 1.77%, up by 0.09 percentage points, and an increase in NPL balance of about 6.8 billion [5]. Risk Management and Asset Disposal - The banking sector is actively managing risks, particularly in retail and small micro-enterprise loans, with pressures noted in these areas [6]. - The second quarter of 2025 saw a significant increase in the scale of non-performing loan transfers, with the total unpaid principal amount reaching 66.7 billion, a year-on-year increase of 108.8% [6]. - State-owned banks and joint-stock banks maintained strong performance, with state-owned banks' NPL ratio decreasing slightly to 1.21% [7].