CHINA’S banks and insurance institutions, which are fairly resilient to risks, intend to step up support to virus-hit sectors, an official said.

“The steady operation of the financial sector is key to keeping economic fundamentals stable and economic circulation smooth,” said Liang Tao, vice chairman of the China Banking and Insurance Regulatory Commission (CBIRC).

Liang made the remarks while pointing out headwinds like pressure on the yuan’s exchange rate stability due to monetary tightening in some developed economies, as well as higher raw material prices driven by global volatility and domestic COVID-19 resurgences.

Official data from the first quarter of this year show that the banking and insurance sectors are capable of handling risks. The overall nonperforming loan ratio of China’s banks stood at 1.79%, slightly down from the beginning of this year. The solvency of insurance companies is also sound.

Risk levels are tame in some major sectors, said Liang. China is issuing sufficient loans to meet the financing needs of real estate developers, while the nonperforming ratio of real estate loans is significantly lower than the overall ratio. Risks related to inclusive loans to small and micro firms are also well under control, Liang added.

“China’s fundamentals for economic resilience, internal growth momentum and long-term growth will not change,” Liang said.

He said the CBIRC will continue to fend off financial risks while cranking up support to the real economy amid COVID-19 control.

Liang pointed out that COVID-19 disruptions have dampened financing needs for many companies, especially since April. Some other firms have faced difficulties to make loan repayments on time, posing the threat of more bad loans and financial risks.

In response to these challenges, the CBIRC is urging faster implementation of already formulated supportive policies that will improve and expand the credit supply.

Major State banks aim at 1.6 trillion yuan (US$239.2 billion) in new inclusive loans to small and micro firms, while banks are directed to lend more to agricultural causes and grain producers, according to Liang. (Xinhua)