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Major Chinese banks incur Q1 losses amid Covid-19 pandemic

Banks recorded a 9.4 percent dip in their Q1 net profit

Major Chinese banks are likely to post losses in their first quarter earnings, media reports said. The global financial crisis due to Covid-19 pandemic has compelled banks to surge bad loans provisions. It is reported that among the major banks, China Construction Bank (CCB), Bank of China (BoC) and Commercial Bank of China (ICBC) are also in the list.

Hong Hao, head of research at BoCom International, told the media, “Banks had it easy in the past, but now many signs indicate they’re under great pressure. The pandemic has hit small businesses hard; the balance sheets won’t be pretty.”

It is reported that Chinese banks recorded a 9.4 percent dip in their first quarter net profit while top five banks recorded a 12 percent profit fall from a year ago. The government of China has suggested banks not to aim for $212 billion profit this year and instead help companies by dropping lending rates and fees and defer loan payments. Furthermore, the banks are advised to offer cheaper loans to foster growth and employment.

Many smaller banks are directed by the banking regulators to take measures against further losses by reducing banker’s salaries. The move will have a positive impact on the balance sheets and help the banks to sustain during the time of pandemic.

China recorded profits in its economy in the second quarter after it slumped at the beginning of the year due to the outbreak of Covid-19 pandemic.

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