The Chinese real estate sector has been in crisis since 2021. Costfoto/NurPhoto/Getty Images
China’s housing crisis has impacted the country’s largest banks and led to a rise in bad loans.
Beijing is urging banks to increase financing for “white-listed” developers to help the sector.
Despite the crisis, Chinese banks say they have enough buffers to deal with the risks.
The real estate crisis in China has also affected the largest credit institutions. They reported an increase in non-performing loans.
The amount of problem loans at the four major Chinese banks – the Industrial and Commercial Bank of China, the Bank of China, the China Construction Bank and the Agricultural Bank of China – increased by 10.4 percent in 2023. From 1.117 trillion Chinese yuan (about 143 billion euros) in 2022 to 1.23 trillion yuan (about 158 billion euros). This comes from one Analysis of “Nikkei” based on the figures published by financial institutions this week.
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The banks were, according to “Bloomberg“Everyone was profitable last year. However, their profit margins are coming under increasing pressure from the impact of China’s real estate crisis. Still, Beijing is pushing banks to increase financing to developers who are on a “white list” of companies.
The Chinese real estate sector has been in crisis since the second half of 2021. At that time, a liquidity crisis at Evergrande – once China’s second largest property developer – became known. Evergrande is now in liquidation. Meanwhile, other Chinese real estate developers have run into similar problems and have started defaulting on their bond payments. This in turn fuels fears that the real estate crisis in China could spread to other sectors of the economy and the entire world.
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Chinese lenders said they have enough buffers to weather the crisis despite the rise in bad loans. They would also control the risks of lending to property developers, according to “Nikkei”.
This text was translated from English by Susanne Ködel. You can find the original here.