Chinese banks could post flat or declining earnings in article 2020-PBOC

by May 24, 2020Business0 comments

SHANGHAI: Chinese lenders could post flat or even falling earnings in 2020 despite first-quarter earnings growth as the coronavirus outbreak brings difficulties to the economy, the country’s central bank said in an article Sunday.

For the first quarter of 2020, China’s commercial banks posted net earnings of 600.1 billion yuan ($ 84.2 billion), an increase of 5% year-on-year, mainly due to the expansion of bank assets and lower costs. of administration, according to an article from the research office of the People’s Bank of China.

The possibility that banks may post zero or even negative earnings growth within 2020 cannot be ruled out, due to the accumulation of bad loans and rapid drainage of cash reserves, as the difficulties in the real economy are spreading to the financial area, the PBOC warned in the article.

Chinese banks need to continue to support the real economy, which faces several challenges due to the coronavirus outbreak, particularly small and micro-businesses, as there is room for banks to reap some of their healthy profits, according to the article.

In an effort to dampen the economy, small and medium-sized businesses can delay loan and interest payments for another nine months, until March 2021, and loans to SMEs by large commercial banks should grow more than 40% Prime Minister Li Keqiang said on Friday.

In March, China’s largest state banks said the impact of movement restrictions imposed to stem the spread of the coronavirus could reduce asset quality as borrowers struggle to repay loans. ($ 1 x 7.1269 yuan Chinese renminbi) – Reuters

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