China’s Battered Banks Brace for Worst-Case Economic Scenario

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The impact of the spreading coronavirus risks bringing to life the worst-case economic scenarios contained in China’s annual banking stress tests. Last year’s exercise envisaged annual economic growth slowing to as low as 4.15% — a scenario which showed that the bad loan ratio at the nation’s 30 biggest banks would rise five-fold. Analysts now say that the outbreak could send first-quarter growth to as little as 3.8%.

Banks are already suffering record loan defaults as the economy last year expanded at the slowest pace in three decades. The slump tore through the nation’s $41 trillion banking system, forcing the first bank seizure in two decades and bailouts of two other key lenders.

“The banking industry is taking a big hit,” said You Chun, a Shanghai-based analyst at National Institution for Finance & Development. “The outbreak has already damaged China’s most vibrant small businesses and if it prolongs, many firms will go under and be unable to repay their loans.”

webcache.googleusercontent.com/search?q=cache:_dEcuzOsUKEJ:https://www.bloomberg.com/news/articles/2020-02-09/china-s-battered-banks-brace-for-worst-case-economic-scenario

It’s Feb 2020. Don’t see how we make it to Christmas with things getting superbad.

 

 

Mark

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