Chinese Banks Expand Bad Debt Write Offs by 96.3 Billion Yuan in Jan-Aug Period

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Official data points to a sizeable expansion in efforts by Chinese banks to write-off their dud debt in 2020, as the COVID-19 pandemic continues to hamper the health of the economy and the financial system.

As of the end of August the non-performing loan (NPL) balance of China’s banking sector stood at 3.7 trillion yuan, for an increase of 504.1 billion yuan, according to figures released by the China Banking and Insurance Regulatory Commission (CBIRC) on 14 September.

The NPL ratio was 2.14%, for a rise of 0.11 percentage points compared to the start of 2020.

Chinese banks wrote off 730.2 billion yuan in NPL’s during the period from January to August, 96.3 billion yuan more than the figure for the same period last year.

The liquidity ratio of Chinese banks currently stands at 58.3%, and the liquidity coverage ratio 132.5%.

A CBIRC official said that the Chinese banking sector is currently expanding the vigour of its provision coverage. At present the provision balance is 6.5 trillion yuan, and the provision coverage ratio stands at 176.5%.

The net capital amount of Chinese commercial banks is 23.1 trillion yuan at present, and the capital adequacy ratio is 14.21%.

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