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BEIJING, July 14. (Reuters) – Chinese banks face the threat of a rise in problem loans in the future as the current economic recovery is unbalanced and lacks a solid foundation, the country’s leading banking and insurance supervisor said Wednesday.
Outstanding NPLs in the banking sector totaled 3.5 trillion yuan ($ 540.79 billion) by the end of June, up 108.3 billion yuan from the beginning of the year, while the NPL ratio fell to 1.86% Liu Zhongrui reported. A spokesman for the statistics department of the China Banking and Regulatory Commission (CBIRC) told reporters in Beijing.
Since last year, China has pursued monetary and fiscal policies to support an economy shaken by the COVID-19 pandemic. Financial institutions have been advised to lower rates for firms stricken by the viruses, and relief measures have been taken to give borrowers a respite during the crisis.
According to Liu, the regulator is encouraging banks to increase reserves and increase the volume of disposals of bad assets.s scrapped of more is expected in the first half of the year than in the same period last year, Liu said.
Chinese banks are expected to see an increase in profit growth in the first half of this year due to low comparison with the previous one the year the COVID-19 pandemic disrupted business, Liu said.
According to the regulator, total assets of the banking sector rose 9.2% year on year to 328.8 trillion yuan by the end of June, while total liabilities rose 9.1% to 301 trillion yuan.
The regulator saw too in growth in real estate loans fell to 10.3%, as the government restricts financing of the overheated sector to prevent risks. He also said he would strengthen his regulatory oversight of the financial divisions of large Internet platform companies to contain “disorderly capital growth.”
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(Reporting by Tina Qiao and Ryan Wu in Beijing, Screenplay by Zhang Yan, Editing by Louise Havens)
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