(Yicai Global) Feb. 26 -- The non-performing loan balance of China's commercial banks' was CNY2 trillion (USD303 billion) in the fourth quarter, down 0.04 percent from the previous one, official data show. 

This marks the first decline in the NPL ratio over the past two years since the same quarter in 2016 when it dropped to 1.74 percent from 1.76 percent.

"China had stricter rules on recognizing NPLs and banks wrote off more last year for risk control," Wen Bin, chief researcher of China Minsheng Bank, told Yicai Global, adding the NPL ratio decline for commercial banks in the fourth quarter indicates the stable and sound growth of the banking sector and shows that overall risks are under control.

The China Banking and Insurance Regulatory Commission will keep a sharp eye on areas of significant risk, continue exert itself to dispose of bad assets in banking institutions, and rein in the growth of new NPLs, CBIRC Vice Chairman Wang Zhaoxing stressed at a press conference yesterday.

Assets in the banking system rose in the quarter, per data, which shows the domestic and foreign currency in financial institutions was CNY268 trillion by its end, up 6.3 percent from the year before, of which CNY98 trillion, 36.7 percent of the total, was in large commercial banks -- a 6 percent rise -- and CNY47 trillion, or 17.5 percent, was in joint-stock commercial banks, up 4.6 percent.

The banking system has sufficient risk compensation ability. The core tier one capital adequacy ratio for commercial banks (excluding foreign bank units) was 11.03 percent late in the period, up 0.24 percent from the end of the third quarter, while the tier one capital and capital adequacy ratios were 11.58 percent and 14.2 percent, respectively, up 0.25 percent and 0.38 percent from the quarter before.

Editor: Ben Armour