SHANGHAI: Excessive credit growth in China is signalling an increasing risk of a banking crisis in the next three years, a report from the Bank for International Settlements (BIS) says.An early warning of financial overheating - the credit-to-GDP gap - hit 30.1 in China in the first quarter of this year, the financial watchdog said in a review of international banking and financial markets published on Sunday.Any level above 10 signals a crisis "occurs in any of the three years ahead," the BIS said. China's indicator is way above the second highest level of 12.1 for Canada and the highest of the countries assessed by the BIS.Debt has played a key role in shoring up China's economic growth following the global financial crisis. But a China strategist at an international hedge fund said international historical experience is not necessarily applicable to China. The strategist could not be identified as he is not authorised to speak to the media.The BIS also said the estimated debt service ratio - which measures principal and interest payments relative to income - is at 5.4, which is a "potential concern. "This underlines the default risk as borrowers struggle to repay loans.

Source: The Star September 19, 2016 04:07 UTC