China Banking Association Releases Sector Development Report for 2020

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The peak body for the Chinese banking sector has just released its latest report on its development in 2020.

The China Banking Association (CBA) released the “2020 China Banking Sector Development Report” (2020年度中国银行业发展报告) on 31 July, shedding light on the state of the sector during the first half in the immediate wake of COVID-19’s emergence.

The Report points out that the Chinese banking sector’s total assets stood at 290 trillion yuan as of the end of 2019, for YoY growth of 8.14%, while total liabilities were 265.54 trillion yuan, for a YoY rise of 7.71%.

The interest rate spread was 2.20%, for a rise of 2bp compared to the end of 2018.

Chinese commercial banks posted full year profits of 1.99 trillion yuan in 2019, for a YoY rise of 5.80%, and an acceleration of 1.1 percentage points compared to the year previously.

According to the Report the COVID-19 pandemic has created a huge shock for nations around the world, as well as put the global economy in a state of “decline,” which means that the growth of the Chinese economy faces “unprecedented challenges.”

As of the end of June the total assets of the Chinese banking sector were 301.5 trillion yuan, for YoY growth of 9.8%.

In the first half of 2020 renminbi loans increased by 12.09 trillion yuan, 2.42 trillion yuan ahead of the figure for the same period last year.

According to the Report the key operating and regulatory indices for the Chinese banking sector currently lies within “rational territory,” although a rise in non-performing asset pressure is expected in the near future.

A number of small and medium-sized financial institutions are subject to considerable potential risk and challenges, due to poor corporate governance and a rebound in market malfeasance.

As of the end of June the non-performing loan (NPL) balance was 3.6 trillion yuan, for an increase of 400.4 billion yuan.

The NPL ratio was 2.10%, for a rise of 0.08 percentage points compared to the end of the year, while the provision coverage ratio was 178.1%, for a decline of 4 percentage points compared to the start of the year.

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