Major Chinese banks saw their non-performing loan (NPL) ratios fall only slightly to 8.02 percent on average by the end of May, a senior Chinese banker revealed Friday.

The "big four" state banks and 15 smaller national shareholding banks, the bedrock of China's financial system, kept 1.2 trillion yuan in outstanding NPLs, 3.7 billion yuan less than a month earlier, China Banking Association President Guo Shuqing said.

"It takes time to dispose of the NPLs," Guo told an economic forum in Beijing. "But the NPLs will be on the decrease."

Chinese banks piled up a mountain of bad loans due to reckless lending over the past decades. The government transferred 1.4 trillion yuan of NPLs from the "big four" -- the Industrial and Commercial Bank of China, the Bank of China, China Construction Bank and the Agricultural Bank of China -- to asset management companies in a 1999 bailout move.

Domestic banks are moving to transform themselves into shareholding companies and seek stock market listings to help upgrade business ahead of the full opening of the financial market to foreign competition by the end of this year under a WTO commitment.

"For state-owned commercial banks, their internal corporate governance should continue to be strengthened," said Guo, who is also chairman of China Construction Bank.

(Xinhua News Agency June 30, 2006)