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Anjani Trivedi

China Banks Have a Problem $96 Billion Can't Fix

Provisioning grows as more bad loans come due post-Covid, while Beijing keeps pushing credit for zombie SMEs.

Worse is yet to come.

Worse is yet to come.

Photographer: Yves Dean/Getty

This isn’t the bottom for Chinese banks’ bad loans. Be prepared for more and weaker balance sheets.

China’s lenders reported large declines in net profit for the first time in decades Sunday, citing dire economic conditions fueled by Covid-19. In preparation to deal with ballooning bad debts and future losses, provisions rose sharply by 656 billion yuan ($95.8 billion) for souring loans. Prudent as that may seem, the worst is yet to appear.