(Bloomberg) --
Local Chinese banking regulators are urging lenders to increase their tolerance for bad loans and lower profit targets as the coronavirus hits at businesses across the country.
Over the weekend, China Banking and Insurance Regulatory Commission's Zhengjiang branch asked banks in the region to be more lenient on bad loans and reduce their profit targets. The local bank watchdog in Jiangsu called on lenders to further relax the non-performing loan metric for small and micro enterprises impacted by the virus outbreak.
The death toll has now climbed to more than 1,000 people, impacting large swaths of the world's second-largest economy.
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Rating firm S&P Global estimated a prolonged health emergency could cause the banking system's non-performing loan ratio to more than triple to about 6.3%, amounting to an increase of 5.6 trillion yuan ($800 billion).
Zhejiang is one of China's economic powerhouse provinces, home to Alibaba Group Holding Ltd. among other companies. It's bordered by Jiangsu to the north.
To contact Bloomberg News staff for this story: Evelyn Yu in Shanghai at yyu263@bloomberg.net
To contact the editors responsible for this story: Candice Zachariahs at czachariahs2@bloomberg.net, Jonas Bergman, David Scanlan
©2020 Bloomberg L.P.
With assistance from Bloomberg
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