China’s biggest four banks have been hit by a more than 50 per cent increase in overdue loans from the property sector over the past year, as the real estate market’s liquidity crunch spills into the financial sector.

China’s top lenders — the Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China and Bank of China —  last week reported combined overdue property loans of Rmb136.6bn ($20bn) at the end of June, up from Rmb90bn at the same time last year.

The rise in bad loans from the deteriorating property crisis is worsening asset quality across China’s Rmb367.7tn banking industry. Beyond bad debts, the banks are also suffering from weakening loan demand from their best corporate and retail clients as growth slows in the world’s second-biggest economy.