MNI POLICY: China Bank NPL Ratio May Pick Up: Regulator

By Archie Zhang 

     BEIJING (MNI) - China's banks may see a modest pick-up in non-performing

loans as the economy reopens, said spokesman Xiao Yuanqi of the China Banking

and Insurance Regulatory Commission (CBIRC) Wednesday. 

     Bank's NPLs, a key indicator for bad loans, rose to 2.04% through Q1,

higher by 0.06 percentage points, with the virus outbreak the key factor, Xiao

said. "It's within our expectations," he added.

     The banking regulator has taken measures including stress tests and

reducing NPLs, Xiao said. It has disposed of CNY450 billion NPLs in Q1, CNY81

more than a year ago, Xiao said. CBICR also has CNY6 trillion provisions and

capital, "sufficient to manage risks," he said. 

     Here are the major takeaways:

     - Banks disposed of CNY450 billion non-performing loans in Q1, CNY81

billion more than the figure in last year Q1, Xiao said. 

     - Banks also allowed borrowers to delay repaying interests and principals

for loans totalling more than CNY880 billion, according to Huang Hong, a vice

chairman of the banking regulator said at the same conference. 

     - Banks must monitor capital flows and not let property-backed lending flow

back to the same market, Xiao said.

     - Loans to SMEs in Q1 rose 25.93% y/y, with the five biggest state-owned

national banks lending to them at an average interest rate of 4.3%, 30 bps lower

than the average in 2019, Huang added. 

     - The regulator is also pushing for reforms and reorganizations in regional

banks, a sector with more than 4000 banks and CNY77 trillion assets, said Cao Yu

another vice chairman at the CBIRC.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: archie.zhang@marketnews.com

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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