MNI POLICY: China NPL Clean-Ups Rise 48% On Year Ago Level

China's banking system is estimated to have digested CNY3.4 trillion in non-performing loans this year, up around 48% from 2019, and the number will continue to rise in 2021 as many risks associated with total lending have been rolled over, said Guo Shuqing, the Chairman of the China Banking and Insurance Regulatory Commission, in an interview with state-run Xinhua News Agency.

"It is expected that the risk of large amount of loans will surface later. There will be greater pressure since non-performing loans will continue to rise in the future," Guo said Thursday.

The NPL ratio saw a 0.08% increase by the end of Q2 to 1.94% and the Guo commented that it is important for banks to assess loan risk and prepare provisions in advance to improve their risk resistance.

Meanwhile, Guo encouraged banks and insurance companies to participate in the bond market promoting the sales of corporate bonds and helping companies obtain long-term and low-cost financing, Guo said.