China's Bank Non-Performing Loan Ratio Rises to 2.04% by End of Q1

[Asia Economy Beijing=Special Correspondent Park Sun-mi] Due to the economic shock caused by the spread of the novel coronavirus infection (COVID-19), non-performing loans (NPLs) in China's banking sector are rapidly increasing.

On the 22nd, the China Banking and Insurance Regulatory Commission (CBIRC) announced that the NPL ratio in the banking sector recorded 2.04% at the end of the first quarter, rising 0.06 percentage points compared to December last year. Generally, NPLs refer to loans overdue for more than three months that are unlikely or difficult to be recovered.

The financial supervisory authorities explained that despite banks taking measures such as deferring repayment of loans worth 880 billion yuan and refinancing debts amounting to 576.8 billion yuan to minimize the economic impact of COVID-19 on companies, the NPL ratio still showed an upward trend.

The increase in non-performing loans in the banking industry is expected to be reflected in the banking sector's first-quarter earnings announcement scheduled for the 28th. Earlier this month, Standard & Poor's (S&P) Global estimated that Chinese banks would face credit losses of 1.6 trillion yuan due to COVID-19.

CBIRC forecasted that the NPL ratio in the banking sector would continue to rise in the second quarter as well. However, it stated that overall financial market risks are under control and that restructuring plans for some small and medium-sized banks are also being prepared.

This content was produced with the assistance of AI translation services.