(Yicai) Aug. 9 -- Industrial Bank has said it held nearly CNY220.9 billion (USD30.7 billion) in local government financing vehicle bonds at the end of last year, down CNY86.8 billion (USD12.1 billion) from 2021, and much lower than the figure claimed by Goldman Sachs.

In a report last month, Goldman Sachs downgraded major Chinese lenders, including Fuzhou-based Industrial Bank, which it claimed held CNY2 trillion (USD277.9 billion) in local government bonds or LGFV loans.

At the end of 2022, the non-performing asset ratio of Industrial Bank’s LGFV debt was 1.23 percent, 0.74 percentage point lower than at the end of the previous year, and the balance of dud assets was CNY2.7 billion (USD374.8 million), down CNY3.3 billion, China Securities Journal reported today, citing data provided by the bank.

The debt balance includes funds that may be involved in its actual holding of debts and related businesses.

On July 5, Goldman Sachs released a report on Chinese lenders called Testing the ‘Impossible Trinity,’ which expressed concerns about banks’ exposure to local government debts, and the varying impact on their balance sheets.

In the report, Goldman Sachs gave a sell rating to five of China’s 12 largest commercial banks, including Industrial and Commercial Bank of China, the country’s largest bank, and Industrial Bank.

China Merchants Bank, also mentioned in the report, previously said publicly that the LGFV loans in its balance sheet reached about CNY132.6 billion at the end of last year, up CNY9 billion (USD1.2 billion) from a year earlier, but far below the figure of CNY1.6 trillion claimed by Goldman Sachs.

China Merchants Bank said its business balance of LGFV loans accounted for only 2.32 percent of its total loans and advances at the end of 2022, adding that its bad loan ratio was 0.14 percent at the end of 2022, edging down 0.49 point from a year earlier, with generally controllable financial risk from LGFV loans.

Editor: Tom Litting