Chinese commercial banks' non-performing loans fell by 62.98 billion yuan to 497.33 billion yuan ($72.85 billion) in 2009, the China Banking Regulatory Commission (CBRC) said in a statement on Friday.

Non-performing loans represented 1.58 percent of the banks' loan books, down 0.84 percentage points from the start of the year, while provision cover was 155.02 percent, up 38.57 percentage points.

China undertook a massive loosening of credit last year as the government encouraged domestic economic activity to combat the effects of the global financial crisis. In the first two weeks of this year China has taken steps to tighten money supply.

Ratings agency Fitch, affirming its A+ long-term currency rating on China, said on Thursday that it was concerned about an eventual deterioration in banks' asset quality after the surge in lending.

In the agency's view, falling non-performing loans do not indicate that banks' asset quality is improving, as some new loans have been used to roll over delinquent obligations, and the predominance of bullet-oriented repayment structures means that any problems associated with recent lending are unlikely to be evident until the loans mature, Fitch said.

Standard & Poor's on Tuesday also reaffirmed its A+ long-term credit rating on China, citing its external assets, robust growth and small pile of debt.

China's biggest banks are Agricultural Bank of China , Industrial and Commercial Bank of China <601398.SS> <1398.HK>, Bank of China <3988.HK> <601988.SS> and China Construction Bank Corp <0939.HK><601939.SS>.

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