Shanghai Daily news

The number of local banking institutions has hit 3,108, making Shanghai the city with the most integrated banking sectors in China, the local banking regulatory commission said yesterday.

Major domestic bank organization and operation centers have been flocking to the city, improving the management and operation capability of the city's banking sector. Currently, 36 banking corporations and 27 operation centers are operating in Shanghai.

Meanwhile, bad loan ratios at banks in Shanghai have dropped to a record low of 2.51 percent at the end of last year amid improving credit.

It is the first time the non-performing loan ratio, which dipped 0.55 percentage point a year ago, has fallen below three percent in Shanghai.

The outstanding value of bad loans sat at 46.21 billion yuan (US$5.92 billion) in the city at the end of 2006, down 4.31 billion yuan from the beginning of 2006, the Shanghai Bureau of the China Banking Regulatory Commission said yesterday in a statement.

"Local banks are showing better credit, with more profits channels," Wang Huaqing, head of the local banking watchdog, said in the statement.

Better risk management against bad loans sits at 91 percent at domestic banks, up 21 percentage points from a year ago, the regulator said.

Pre-tax profits at banks in Shanghai gained 14.4 percent to 40.3 billion yuan last year. Fee-based income from domestic and overseas banks increased 39 percent to 8.9 billion yuan.

China fully opened its banking sector in December under its World Trade Organization commitment. The arrival of overseas banks pushed domestic lenders into seeking more income vehicles. Individual investment products also grew amid the trend.

Foreign-exchange investment products gained 21 percent to 32.1 billion yuan.