Chinese central bank: Chinese bank profits may stabilize or fall in 2020

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The Chinese Central Bank said in an article on Sunday that the profits of Chinese banks may stabilize or even decline in 2020 despite their growth in the first quarter of the year, due to the difficulties faced by the economy due to the outbreak of the Corona virus.</p><div data-qa-component="item-story" data-rc-highlight="story" dir="rtl">
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    Chinese commercial banks reported net profits of 600.1 billion yuan (84.2 billion dollars) in the first quarter of 2020, an increase of five percent year on year, mainly due to the expansion of bank assets and lower management costs, according to an article from the Research Office of the People's Bank of China.


    In the article, the bank warned that it is not possible to exclude that banks record zero profits or even negative growth in 2020, due to the growth of bad loans and the rapid depletion of cash reserves, with the problems of the real economy extending to the financial sector.


    The article said that Chinese banks should provide more support to the real economy, which faces various challenges due to the outbreak of the Corona virus, especially small and micro companies, as there is room for banks to cede part of their strong profits.


    Prime Minister Li Keqiang said on Friday that, as part of efforts to boost the economy, SMEs could delay repayment of loans and interest for an additional nine months, until March 2021, and that commercial bank lending to small and medium enterprises should grow more than 40 percent.


    In March, the largest Chinese state-owned bank said that the impact of restrictions on movement to stem the spread of the Corona virus could reduce the quality of assets in light of difficulties borrowers find to repay loans.




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