Banking, insurance sector maintains stability in Q1: regulator

China's banking and insurance sector experienced stable operations in the first quarter and a number of targeted policies and measures have been put in place to encourage sector institutions to increase support for the real economy, top industry regulators said on Wednesday.

Banking and insurance institutions have done much to help enterprises and people fight against the COVID-19 health crisis, said Huang Hong, vice chairman of the China Banking and Insurance Regulatory Commission. Banks offered preferential interest rates and granted special credits lines to companies in the transportation and medical resources manufacturing sectors.

Lending to micro and small enterprises had increased by 25.9 percent year on year at the end of the first quarter, while the interest rate on new loans issued by five major state-owned banks to small businesses dropped by 0.3 percentage points from 2019 to a new low of 4.3 percent, the watchdog noted.

From January to March, loans to enterprises, privately owned businesses and self-employed individuals jumped by 2.5 trillion yuan (US$352billion), nearly double the increase in the same period last year.

To ease liquidity pressure on enterprises, a total of 576.8 billion yuan of loans was renewed in the first quarter, of which nearly 90 percent was invested in micro, small and medium-sized businesses. And lenders have already deferred repayment of principal and interest on about 880 billion yuan of loans, and at the same time arranged repayment plans for personal housing mortgage loans and consumer loans, thereby relieving the pressure on enterprises and residents to repay their debts.

To help companies resume operations, banks have provided financing support for upstream and downstream industrial enterprises by way of accounts receivable, orders and warehouse-receipt pledges. At the end of March, the banking sector offered daily capital turnover support to 218,000 core enterprises, with a balance of 21.4 trillion yuan.

Also, financial support has been lent to the real economy, especially to manufacturing, wholesale and retail as well as infrastructure sectors. In the first quarter, yuan loans surged by 7.1 trillion yuan, or 1.3 trillion yuan more than that in the same period last year.

Top banking and insurance regulators said it has encouraged more direct financing such as bonds and equity to provide comprehensive funding services for enterprises. In the first quarter, a total of 2 trillion yuan was invested in bonds and insurance funds added 126.3 billion yuan in equity investment.

As Huang said, under the impact of the epidemic the number of overdue loans and defaults has increased and banks’ non-performing loans have increased, but the banking industry on the whole is still resistant to risk.

Insurance companies have played an important role in safeguarding people's livelihood and sharing losses during the pandemic, the watch dog added. Underwriters set up fast service channels for customers affected by the epidemic, appropriately expanded the scope of insurance liability and made due compensation.

Insurance payouts hit 301.9 billion yuan in the first quarter, with 16.1 billion yuan spent on credit guarantee insurance claims, an increase of 50 percent year on year.