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Finance

Chinese banks join global rush to fortify against COVID losses

Profits under pressure as bad loans mount and lending rates drop

HONG KONG -- China's largest banks have followed global rivals in setting aside record funding to cover loan losses after regulators ordered them to accelerate provisions, as the economic impact of the coronavirus pandemic casts doubt on the ability of companies and consumers to repay.

The provisions sent the combined profits of China's four largest lenders tumbling by more than 10% in the first half of 2020, the sharpest decline in over a decade. Bad loans are expected to surge, with margins on new loans sliding after Beijing ordered the banks to reduce interest rates to stimulate the economy.

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