Outstanding non-performing loans at banks in China rose for six quarters in a row during the first quarter of 2013, according to the China Banking Regulatory Commission.

Outstanding non-performing loans amounted to ¥526.5 billion ($85.71 billion, $1 = ¥6.14) as of March 31, 2013, with the non-performing loan ratio edging up by a tenth of a percent from three months earlier to 0.96%, figures from the banking regulator show.

Shang Fulin, the director of the banking regulator, said that outstanding non-performing loans would probably continue to rise.

"New non-performing loans in 2012 stemmed primarily from steelmakers, solar panel makers and shipbuilders in coastal provinces," Shang said. "And a spate of steelmakers has defaulted on loans since the beginning of 2013."

The banks had ¥141.3 trillion in assets and ¥132.2 trillion in liabilities as of the end of March 31, 2013, up 17% and 16.9% respectively from a year earlier. Banking assets have increased five-fold over the past 10 years.

However, burgeoning banking assets have resulted in three persisting problems: illegal lending, large interest rate gaps and hidden toxic assets, while flawed appraisal systems and other systemic failures have contributed to the problems forming, Shang noted.

China Construction Bank Corp (HKG: 0939, SHA: 601939), Agricultural Bank of China Ltd (HKG: 1288, SHA: 601288) and the Export-Import Bank of China were found by the national audit office to have extended a total of ¥24.57 billion of illegal loans in 2011.

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