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China's banking sector is anticipated to promote $ 490 billion in unhealthy loans in 2020: Xinhua

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BEIJING (Reuters) – China's banking industry is projected to sell 3.4 trillion yuan ($ 489.91 billion) in bad loans in 2020 to help contain financial risks in an economy weakened by COVID-19, official Xinhua news agency reported.

"The sector will continue to exacerbate bad credit sales in 2021 as some of the problems due to late loan payments are exposed next year," quoted Xinhua Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission (CBIRC) in and interview published on Thursday.

Chinese lenders sold 2.3 trillion yuan in bad loans in 2019, Guo said.

Guo, also the head of the Communist Party of China's Central Bank, warned that financial risks can arise in the current circumstances and that the upward pressure on bad loans is "relatively large".

He urged banks to increase risk provisioning and replenish their capital to strengthen their buffers against risk.

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