Banks and consumer finance companies accelerate bad debt clearance in Q1, with "short aging" assets and "floor price" transactions appearing simultaneously

On March 24, Industrial Bank Consumer Finance announced two personal non-performing loan transfers on the Banking Credit Asset Registration and Circulation Center (hereinafter referred to as the Credit Registration Center), with total unpaid principal and interest exceeding 1 billion yuan each, and a combined scale surpassing 20 billion yuan, involving more than 20,000 loans classified as “losses.”

On the same day, the Credit Registration Center updated a total of 15 non-performing loan transfer announcements, with transferors including several nationwide banks such as Bank of China, Postal Savings Bank, and Ping An Bank.

Since the beginning of the year, listing of large asset packages has become routine. Data shows that from the start of the year to late March, the Credit Registration Center has issued over 370 non-performing loan transfer notices.

Policy window extension

The surge in market activity is driven by clear policy expectations. On December 29, 2025, the National Financial Regulatory Administration officially issued a notice extending the pilot period for non-performing loan transfers to December 31, 2026. This is the second extension since the pilot was launched in 2021, providing financial institutions with reassurance for planning their medium- and long-term asset disposal strategies.

Meanwhile, as the operating platform, the Credit Registration Center has also introduced substantive preferential measures. Starting January 1, 2026, it will continue to waive listing service fees for non-performing loan transfers and offer an 80% discount on transaction service fees. This combination of “extension + fee reduction” significantly lowers compliance costs and operational thresholds for financial institutions.

Policy warm wind quickly translates into market actions. At the beginning of 2026, consumer finance companies became the most active suppliers in the market. In January alone, leading institutions such as Zhaolian Consumer Finance, Bank of China Consumer Finance, and Ant Consumer Finance densely listed on the Credit Registration Center, with total unpaid principal and interest exceeding 11 billion yuan, accounting for nearly 70% of the total listing volume that month.

Among them, Zhaolian Consumer Finance listed five batches of consumer loan non-performing asset packages on January 23, with a total unpaid principal and interest of about 6.27 billion yuan, and all packages had an average overdue period exceeding 1,500 days. Ant Consumer Finance listed two batches of personal non-performing loans on January 29, with a total unpaid principal and interest of 2.37 billion yuan.

In March, the listing of over 2 billion yuan in asset packages by Industrial Bank Consumer Finance in a single day was just a recent peak. Previously, Postal Savings Consumer Finance listed a personal consumer loan non-performing asset package with unpaid principal and interest totaling 919 million yuan on March 4. Changyin 58 Consumer Finance also concentrated on listing four projects on March 17, with total unpaid principal and interest reaching 1.719 billion yuan.

On March 11, China Construction Bank issued ten non-performing loan transfer announcements simultaneously, involving branches in Zhejiang, Henan, Jiangsu, and other provinces. CITIC Bank Tianjin Branch listed a personal consumer loan non-performing asset package with unpaid principal and interest of 112 million yuan on March 20. The Suzhou branch of Bank of Communications, the Beijing branch of Huaxia Bank, and other institutions have also recently launched non-performing asset transfer projects worth several hundred million yuan.

A professional in non-performing asset disposal pointed out that consumer finance businesses are characterized by customer base sinking, primarily credit loans, and relatively short business cycles, making their asset quality more vulnerable during economic fluctuations. Accelerating the transfer of non-performing assets helps consumer finance companies quickly recover funds, reduce provisioning pressure, and optimize financial statements, thus creating room for future business expansion.

Disposal urgency

Unlike the long-term “bad debts” transferred in early stages, the current market asset packages show clear “short account age” features, reflecting the urgent disposal needs of transferors. For example, a personal operating loan non-performing asset package listed by China Construction Bank Guangdong Branch in 2026 had an average overdue period of only 145.47 days.

“Quickly stripping assets with shorter overdue periods that have not yet fully settled is an active risk management behavior under loss-cutting thinking,” explained a professional from the asset management department of a city commercial bank in western China. Behind this may be two considerations: first, internal collection resources are limited, and in the face of increasing overdue accounts in the short term, batch transfers are more efficient; second, future cash recovery rates are expected to decline over time, so it’s better to transfer early to lock in some recovery value and prevent further deterioration of asset quality.

The concentrated release of supply has rapidly reversed the market supply-demand relationship, leading to downward pressure on transfer prices, with frequent occurrences of “floor price” transfers. Public information shows that a non-performing asset involving eight corporate clients from Jinshang Bank, with a book value of 1.421 billion yuan, was ultimately sold to Jin Yang Asset Management Company at a price of 310 million yuan, with a discount rate as low as 21.8%. Market data indicates that the average discount rate for bulk transfers of personal non-performing loans has risen from 20-30% at the pilot’s start to about 41% in the first quarter of 2025. Fierce price competition places high demands on the valuation and cost control capabilities of transferees.

Meanwhile, transferors are increasingly strict and detailed in their requirements for transferees. Changyin 58 Consumer Finance explicitly states in multiple transfer notices that transferees must have a professional in-house collection team, a complete complaint handling mechanism, and a comprehensive asset management system. These professionals believe that such terms aim to regulate post-transfer disposal behaviors, protect the legitimate rights and interests of financial consumers, and are necessary measures for transferors to isolate risks and prevent reputation and legal risks caused by improper collection. Under the increasingly strict regulatory environment protecting consumer rights, compliant disposal has become a “lifeline” for market participants.

Market challenges

With the extension of the pilot, industry experts generally expect that the non-performing loan transfer market will shift from the “sprint” disposal mode driven by policy uncertainty at the end of 2025 to a “normalization and marketization” operation stage. A report by Guotai Junan Securities shows that in 2025, the total unpaid principal and interest involved in non-performing loan transfer announcements by the Credit Registration Center reached 432.9 billion yuan, a year-on-year increase of 58.8%. This indicates that non-performing asset transfers are becoming an important liquidity management and risk mitigation tool, especially for institutions with a high proportion of retail business.

However, behind the rapid market expansion, challenges remain significant. A professional in asset management summarized the main challenges as threefold:

First, pricing challenges. Individual non-performing loans are inherently “small, dispersed, and unsecured,” making future cash recovery highly uncertain and precise valuation extremely difficult.

Second, disposal challenges. After acquiring assets, transferees mainly rely on their own or third-party collection efforts, with returns highly dependent on the compliance, professionalism, and technical capabilities of collection teams. Under stricter consumer protection regulations, compliance disposal costs are rising.

Third, capital challenges. This mainly concerns transferors, especially small and medium-sized banks. Data from the National Financial Regulatory Administration shows that as of the end of Q4 2025, the capital adequacy ratios of city commercial banks and rural commercial banks were 12.39% and 13.18%, respectively, below the industry average; their non-performing loan ratios, however, were 1.82% and 2.72%, significantly above the industry average. For these banks, disposing of non-performing assets is a “stop-loss,” while capital replenishment is a “blood transfusion,” and both must advance simultaneously; otherwise, they risk falling into a vicious cycle of “risk accumulation and capital erosion.”

The healthy development of the market relies on technological support. Using big data, artificial intelligence, and other technologies to accurately classify, value, and price risks of large claims is key to solving information asymmetry and improving transaction efficiency, the professional states.

He emphasizes that building a complete ecosystem is also crucial. It is necessary to cultivate more professional, compliant asset management service providers (AMCs) and collection agencies, forming a multi-layered, specialized disposal ecosystem, so that different types and levels of assets can find suitable disposal channels. Only then can the personal non-performing loan transfer market effectively clear risks while safeguarding the bottom line of consumer rights protection.