According to a report from China’s Xinhua News Agency, China’s banking industry is expecting to expecting to write-off $489.91 billion (3.4 trillion yuan) of bad debts in 2020. These bad loans have cropped up due to Wuhan coronavirus.
“The sector will further step up bad loan disposals in 2021, as some of the problems will be exposed next year due to delayed loan payments,” said Xinhua in its report quoting Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission (CBIRC), in an interview.
According to Guo, Chinese lenders wrote off non performing assets worth 2.3 trillion yuan in 2019.
Guo, who is the Communist Party chief of the country’s central bank, has warned that Beijing will have to face greater financial risks due to COVID-10 and that upward pressure on bad loans is “relatively big”.
Guo has urged banks to increase their bad loan provisions and replenish their capital to strengthen the buffers against risks.