2020: Chinese banks dispose $467b in non-performing assets
Updated 19:49, 22-Jan-2021
The China Banking and Insurance Regulatory Commission in Beijing, China, December 5, 2020. /CFP

The China Banking and Insurance Regulatory Commission in Beijing, China, December 5, 2020. /CFP

China's banking sector disposed 3.02 trillion yuan ($466.6 billion) in non-performing assets in 2020, China's Banking and Insurance Regulatory Commission (CBIRC) said on Friday.

The non-performing loan ratio of the banking sector was 1.92 percent by the end of 2020, Liang Tao, vice-chairman of the CBIRC told a news conference in Beijing.

The remaining non-performing loan volume stands at 3.5 trillion yuan at the end of 2020, an increase of 281.6 billion yuan from the beginning of the year, while the non-performing loan ratio dropped by 0.06 percentage points for the year, Liang continued.

Regulators have listed a couple of reasons behind the decline in the non-performing loans ratio. "First, we require banks to strengthen risk management and control," said Xiao Yuanqi, chief risk officer at the CBIRC.

"The second is to let the banks increase their efforts to dispose of non-performing loans," he continued, while referring to banks' disposing of 3.02 trillion yuan in non-performing assets over the year as "unprecedented."

A 2.3-percent expansion in the domestic economy also created a good foundation for banks to avoid a sharp increase in non-performing loans, Xiao added.

He cautioned that the situation of the bank's non-performing loans was still relatively severe, and the non-performing loans may rise in the future. He added that regulators had conducted stress tests and prepared contingency plans accordingly.

Bank loans increased by 19.6 trillion yuan in 2020, a year-on-year jump of 2.8 trillion, CBIRC data showed, among which, loans to the manufacturing sector increased by 2.2 trillion yuan, and loans to small and micro enterprises grew by 30.9 percent year on year.

China's commercial banks posted 2 trillion yuan in net profits in 2020, a 1.8-percent decline from a year earlier, Liang said.

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