Mortgage books and developer debts continue to contract rapidly as a percentage of total loans. From an asset quality perspective, mortgage NPL ratios are continuing to rise but remain low in absolute terms and are increasingly being managed through restructuring, maturity extensions, repayment holidays and administrative intervention. Conversely, developer lending remains highly distressed but it is not materially worsening. However, those stresses are becoming increasingly regionalized and concentrated among smaller and lower-tier institutions.

The real systemic issue is less about property market NPL formation itself and more about the increasing difficulties of resolving loans collateralized by property. A number of banks have noted increasing difficulties in NPL disposal due to property collateral impairment and illiquidity.

Overall, the risk looks manageable; however, the property downturn increasingly appears to be evolving into a long duration drag on household confidence, consumption, and loan recovery dynamics rather than a sudden systemic banking crisis.