Delivery workers wearing face masks ride scooters in front of Lujiazui financial district, in Shanghai, China. Consumer behaviour changes will have an uncertain impact on the economy," says Moody's Investor Service. – REUTERSPIXChina's largest state-owned banks are readied for rising bad debt and increased margin pressure in the months ahead as forbearance policies designed to give borrowers breathing space during the coronavirus crisis expire.
Their forecasts highlight the impact of the pandemic and the economic slowdown on China's banks, which have been asked by Beijing to step up and lend to flagging sectors, while sacrificing profits in a bid to revive the country's fortunes. The crater in first-half profit was mostly down to provisioning ordered by regulators, CICC said, noting that second-quarter profit growth would otherwise have been 1.5% to 5.1% for those four lenders.
Ji Zhihong, CCB vice president, predicted that net interest margins, a key profitability indicator, will narrow further. By the end of the June quarter, the average non-performing loan ratio for commercial banks was at 1.94%, data from the commission showed, the highest since 2009. Non-performing loan ratios rose at the big five banks during the reporting period, with ICBC's increasing to 1.5% by the end of June from 1.43% three months earlier, and that of CCB rising by 0.07 percentage points in second quarter to 1.49%.
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