[ET Net News Agency, 14 February 2020] ANZ Research believes the coronavirus outbreak
will impact key industries in China to varying degrees, with sectors such as lodging and
catering, wholesale and retail trade, transportation, and tourism being the most affected.
However, these industries consist mostly of small and privately-owned firms which are
under-served by commercial banks. Thus, Chinese banks' lending exposure to them will be
limited, said the research house.
ANZ estimated banks' potential losses to be CNY400bn in its optimistic scenario, a still
manageable level compared to the country's total non-performing loans of CNY2.4trn as of
3Q 2019, and an annual CNY1.1trn of loan write-offs.
In addition, the provision coverage ratio of Chinese banks averaged 180% at end-2019, so
they will have the capacity to absorb the loan losses without additional assistance.
Therefore, ANZ maintained that the financial risks will be manageable if the Chinese
economy can achieve GDP growth of 5.5% this year with proactive policy measures. (KL)