Standard and Poor's credit ratings agency reduced its estimate of non-performing assets in China's banking sector to about 40% of total system loans at the end of 2003, down from 45% six months earlier. S&P officials said in a teleconference that the next round of non-performing loans (NPLs) was likely to come from overstretched small- and mid-sized enterprises and high-end residential developers. S&P analysts said the quality of loans held by the smaller banks were at risk because of their aggressive efforts to expand their business.