Over Half of China’s Listed Banks See Dips in Bad Debt Ratios in Third Quarter, 70% Post Profit Growth Rebounds

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The third quarter reports of Chinese banks point to sustained recovery from the economic impacts of the COVID-19 pandemic.

36 out of 37 listed A-share banks have issued their financial reports for the third quarter of 2020, with 19 of them posting declines in their non-performing loan (NPL) ratios compared to the second quarter, as compared to 11 that saw gains.

Ping An Bank saw the biggest decline in its NPL ratio, with a drop of 33 basis points compared to the end of the second quarter to 1.32%, while China CITIC Bank and China Minsheng posted the biggest NPL ratio rises.

25 A-share banks also saw rebounds in their profit growth rates compared to the second quarter, accounting for nearly 70% of the total.

Wu Wen (武雯), senior researcher with the Bank of Communications Financial Research Centre, said that the shock of the COVID-19 pandemic on China’s banking sector and macro-economy had gradually weakened, while the overall operating environment for the banking sector was now comparatively loose.

Profit growth for listed Chinese banks are expected to reach a turning point in future and shift from negative to positive, although growth rates will continue to remain low.

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