China Banks to Forfeit $4.6 Billion on Mortgage Break, Citi Says
- Credit risk manageable for most banks, Citigroup estimates
- Loan payment boycott may have ‘unintended’ impact on sentiment
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Chinese banks would forfeit 31 billion yuan ($4.6 billion) of interest income from mortgages under a proposal to give home buyers in stalled projects a temporary payment holiday, according to estimates from Citigroup Inc.
The figure amounts to about 1.2% of estimated net profit in the banking system for 2023, assuming 561 billion yuan of home loans would be at risk if Beijing signs off on the plan, analysts led by Judy Zhang wrote in a research report Tuesday. Credit risk from the latest round of stress in the property sector is manageable for most banks, the analysts estimated.