China Measures Could Add $224 Bln to Banks’ Credit Costs in 2020

China’s measures to support the ailing economy by extending loan repayment and lowering interest rates could increase credit costs for lenders by nearly $224 billion in 2020, S&P Global Ratings says. The credit-cost estimate is equivalent to more than half of S&P’s forecast for the sector’s 2020 net profit, made prior to the outbreak of the coronavirus. “The impact to the sector’s net profit in 2020 could be less if banks opted to lower their provision buffer.” The ratings firm also says banks could earmark forborne loans as special-mention loans, which aren’t classified as nonperforming loans in China, enabling lenders to continue lending to businesses.