BEIJING (Reuters) – China’s banking sector is more likely to present annual revenue progress of 2-3% in 2021 after an anticipated 7% fall this 12 months attributable to hit of the worldwide pandemic, Financial institution of China, the nation’s fourth largest lender, mentioned in a report on Monday.
The restoration is probably going as banks must make fewer sacrifices “to help the actual financial system” subsequent 12 months, with the loan-loss provision enhance “again to regular ranges”, the report mentioned, including that banks had put sufficient apart to digest this 12 months’s dangerous loans in 2020.
China’s largest lenders this 12 months suffered their worst first half revenue drop since they listed on the inventory market greater than a decade in the past, and so they boosted loan-loss provisions all through the primary third quarters of the 12 months as Beijing urged them to step up and lend to flagging sectors.
The report mentioned banks’ credit score dangers are anticipated to maintain accumulating in 2021, as extra soured money owed turn into uncovered as help measures launched due to the pandemic start to run out.
The sector-wide dangerous mortgage ratio is more likely to attain 2-2.2% by the tip of 2021, and can be larger for banks in small cities and rural areas the place financial progress is predicted to sluggish, in line with the report.
The non-performing mortgage ratio of Chinese language business banks was 1.96% on the finish of September, public information confirmed.
“The non-credit funding at some banks will even face comparatively massive dangers in 2021,” in line with the report, “As such investments have primarily flowed into property initiatives and native authorities financing automobiles, and such dangers are contagious.”
(Reporting by Cheng Leng, Zhang Yan and Ryan Woo; Enhancing by Simon Cameron-Moore)