Net Profits of Chinese Banks Fall 2.7% in 2020, Bad Debts Edge Lower in Final Quarter

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The latest data from the China Banking and Insurance Regulatory Commission (CBIRC) points to a significant drop in the profits of the country’s commercial lenders in 2020 amidst the adverse economic impacts of the COVID-19 pandemic.

The total profits of Chinese commercial banks in 2020 were 1.94 trillion yuan, for a YoY decline of 2.7%. The average return on capital of Chinese commercial banks was 9.48%, and the average return on assets was 0.77%.

As of the end of the final quarter of 2020 the non-performing loan (NPL) balance of Chinese commercial banks was 2.7 trillion yuan, for an NPL ratio of 1.84%, and a drop in the NPL ratio of 0.12 percentage points compared to the preceding quarter.

The domestic and foreign currency assets of Chinese banking sector financial institutions stood at 319.7 trillion yuan as of the end of 2020, for a YoY increase of 10.1%.

Large-scale commercial banks had domestic and foreign currency assets of 128.4 trillion yuan, for a YoY rise of 10%. These assets accounted for 40.2% of all banking sector assets.

Joint-stock commercial banks had assets of 57.8 trillion yuan, accounting for 18.1% of the total.

The core tier-1 capital adequacy ratio of Chinese commercial banks at the end of the final quarter of 2020 was 10.72%, for a rise of 0.28 percentage points compared to the preceding quarter.

The tier-1 capital adequacy ratio was 12.04%, for an increase of 0.36 percentage points, and the capital adequacy ratio was 14.7%, for a rise of 0.29 percentage points.

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