BEIJING, July 15 (Xinhua) -- China's banking sector faces on the whole controllable credit risks currently, but there are still pressures for the sector's non-performing loans (NPL) ratio to rise in future, reported Xinhua-run Xinhua Finance citing an official with China Banking and Insurance Regulatory Commission (CBIRC) Wednesday.
Due to the lagging effect of exposure of NPLs, bad loans may further increase along with the expiration of the previous loan principal and interests repayment extension policies, said Liu Zhongrui, head of CBIRC's Statistics, IT and Risk Surveillance Department on a press conference of the State Council Information Office held on Wednesday.
Since 2020, CBIRC has released multiple preferential financial policies including the loan principal and interests repayment extension and fee cuts to protect market entities and offset shocks from the COVID-19 epidemic.
To resolve potential risks and increase the leeway for future risk treatment, CBIRC also guided banks to crank up efforts on setting aside risk provisions and dealing with the doubtful loans in advance, according to Liu.
By the end of June, the NPL ratio of China's banking industry remained reasonable at 1.86 percent and thanks to up scaled efforts into NPL treatment, the NPL ratio declined slightly since the start of this year.
What's more, the ratio of loans with repayment postponed for more than 90 days over NPLs in China's banking sector was 79.6 percent, significantly lower than 100 percent, told Liu, saying that some prudent banks even included loans whose repayment has been put off for over 60 days into their NPLs.
In 2020, China's banking sector dealt with an all-time-high 3.02 trillion yuan of NPLs. In the first quarter of this year, 482.7 billion yuan of NPLs were handled, which exceeded the comparable data in the same period of last year. In the first half of 2021, the NPLs treated are likely to surpass that of the same period of 2020.
However, China is clearly aware of the unbalanced economic recovery and not solid recovery fundamental at present and for some enterprises, in particular the small- and micro-sized businesses and individually-owned businesses, they still have difficulties in business operation, noted Liu.
Under such circumstances, CBIRC will guide banks to prudently run their business and enhance risk control by ramping up efforts into NPL treatment and support them to boost their capital via multiple channels to strengthen their resilience to guard against risks, Liu said. (Edited by Duan Jing with Xinhua Silk Road, duanjing@xinhua.org)
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