(Yicai Global) March 21 -- Gansu Kang County Rural Commercial Bank saw a surge of 3.13 percent in its non-performing loan ratio from early last year to 7.9 percent in late September because the output of walnuts, Sichuan peppers and other crops declined due to bad weather, the bank said yesterday.

The bank in China's Gansu Province released the above news in the 2019 Negotiable Certificate of Deposit Issuance Plan. Major agricultural products suffered a yield drop and even failure in some villages and towns due to weather disasters, resulting in decrease in farmers' income, so some borrowers cannot repay the loan interest on schedule, the bank noted.

The bank extends many loans to farmers, most of whom rely completely on physical labor away from their hometowns their income. Migrant workers can only repay loan principal and interest when they return home for China's Spring Festival, so they find it hard to pay interest quarterly.

Loans with interest repayment delayed for 360 days or above have thus increased, leading to a sharp rise in the NPL ratio.

The bank had CNY184 million NPLs with an NPL ratio of 7.9 percent up to late September, up 66 percent from early last year.

The bank has not flagged all loans overdue for more than 90 days as overdue loans, Yicai Global found in the bank's NCD issuance plan. That is to say, the bank's NPL ratio would probably exceed 7.9 percent if all loans overdue for more than 90 days are labeled overdue.

Rural commercial banks' business performance is greatly affected by weather. Dalian Rural Commercial Bank saw its NPL ratio double to 9.95 percent in late September because of natural disasters in the last two years, including continuous hot weather which caused mass die-offs and failures of captive sea cucumbers and other seafood, the bank said in its 2019 NCD Issuance Plan.

The Kang County bank also blames the large number of NPLs on the rising NPL ratio. The bank has been filed nine lawsuits over large NPLs worth CNY31.5 million (USD4.7 million) since 2017 and only recovered CNY300,000 (USD44,835), the bank noted, saying it won the lawsuits on the remainder, but has not been able to execute judgment.

The bank's core capital adequacy ratio is 19 percent, its capital adequacy ratio is 20 percent, and loan loss reserve adequacy ratio is 370 percent, which all meet regulatory requirements.