Chinese banks would forfeit RMB 31 billion ($4.6 billion) of interest income from mortgages under a proposal to give home buyers in stalled projects a temporary payment holiday, according to estimates from Citigroup Inc, reports Bloomberg.
The figure amounts to about 1.2% of estimated net profit in the banking system for 2023, assuming RMB 561 billion of home loans would be at risk if Beijing signs off on the plan, analysts led by Judy Zhang wrote in a research report Tuesday. Credit risk from the latest round of stress in the property sector is manageable for most banks, the analysts estimated.
The yet-to-be-finalized plan, reported by Bloomberg on Monday, is targeted at bringing relief to hundreds of thousands of buyers of stalled Chinese housing developments, many of whom have joined a payments boycott that’s hit at least 230 projects across 80 cities. The proposed grace period is part of a broader push by the authorities to stabilize the property market, which includes urging local governments and banks to plug some funding gaps for developers, people familiar with the matter have said.