China banks allow mortgage payment holiday in Covid-19-hit Shanghai
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Lenders are offering Shanghai clients a payment holiday on their mortgage loans for as long as three months.
PHOTO: REUTERS
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SHANGHAI (BLOOMBERG) - China's largest banks are allowing residents in Shanghai to delay their mortgage payments as part of the nation's broader efforts to support the financial hub in its Covid-19 fight.
Lenders including Industrial & Commercial Bank of China and Bank of Communications are offering Shanghai clients a payment holiday on their mortgage loans for as long as three months.
China Construction Bank allowed clients to delay their payment on both mortgage and consumer loans for up to 28 days while Bank of China said any records of overdue payment due to the pandemic will be removed.
Shanghai is the epicentre of China's worst outbreak since the early days of the pandemic in Wuhan and the authorities have doubled down on their "zero Covid-19" pillars of mass testing and lockdowns to try to stamp out infections.
It has swiftly turned into a logistical nightmare as the city's 25 million residents - sealed off in their homes for more than a week already - struggle to get basic groceries delivered and officials seek to censor growing public discontent.
Shanghai recorded more than 26,000 new Covid-19 infections for Sunday (April 10), an all-time high, as China's largest documented outbreak continued to spread despite extended lockdowns.
Known as Covid Zero, the strategy has become less effective in preventing domestic flareups due to the growing contagiousness of new variants and more disruptive to economic activities and people's lives.
The move echoed similar efforts in early 2020 when China announced a months-long payment holiday for the nation's small- and medium-sized firms, as well as preferential loan policies, including flexible arrangements for mortgage and credit card payments, to those impacted by the pandemic.
Profit growth at China's megabanks is being threatened by the debt crisis that's rippling through the property market and a resurgence in Covid-19 infections. Bocom president Liu Jun said last month the lender faces the most challenging year in his 30-year banking career this year, citing Covid-19, geopolitical risks and shrinking domestic demand.
Chinese banks had more than 52.2 trillion yuan (S$11.2 trillion) of outstanding loans to the real estate sector as of December, including 38.3 trillion yuan of personal mortgages. The exposure was more than any other industry, and accounted for about 27 per cent of the nation's total lending, according to official data.
