China’s State Council Information Office (SCIO) held a press conference on the performance of the banking and insurance sectors in 1H2021 yesterday. During the press conference, Liu Zhongrui, deputy head of the Statistics, IT & Risk Surveillance Department of the China Banking and Insurance Regulatory Commission (CBIRC) revealed that the Non Performing Loans (NPL) held with Chinese banks could come under pressure after the government’s loan repayment extension policy expires. The meeting comes as China is taking deliberate actions to prevent and control risks in key areas. Other points covered in the meeting are as follows:

  • NPLs in the banking sector have increased by CNY 108.3bn ($16.7bn) to a staggering CNY 3.5tn ($541bn) as of end-Jun in 1H
  • The bad loan ratio fell ~0.1% to 1.86% in the same period
  • Chinese banks’ profits are likely to pick up in 1H
  • Overall liabilities of the banks are expected to be stable and the liquidity risks to be controllable
  • The growth of property loans has expanded by 10.3% YoY, lower than total loans
  • Bad loan ratio of green credit has been maintained below 0.7% in the last five years
  • YoY growth of loans for the manufacturing sector topped 10% for 14 consecutive months
  • The scale of direct investment of insurance funds in related fields such as stocks and bonds reached CNY 4.35tn ($672.5bn)

On Huarong, Zhang Zhongning, spokesperson of CBIRC said that “China adheres to legal and market principles” in handling risky issues and there was no further information to offer on Huarong.

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