A clerk counts cash at a bank in Nantong, Jiangsu province. (Photo: Sipa)

China's disposal of nonperforming loans hit a record high of 3.02 trillion yuan ($466.34 billion) last year, as the country stepped up efforts to mitigate financial risk, Xiao Yuanqi, chief risk officer of the China Banking and Insurance Regulatory Commission, said on Friday.

By the end of 2020, the outstanding balance of nonperforming loans of China's banking sector was 3.5 trillion yuan, up 281.6 billion yuan from the beginning of the year. The NPL ratio, however, dropped 0.06 percentage points to 1.92 percent amid strengthened efforts to prevent and control financial risk in key areas. Overall regional and systemic risks still remain under control, Xiao said.

The banking sector enhanced its resilience by setting aside 1.9 trillion yuan of provisions for impairment losses on loans last year, increasing 113.9 billion yuan year-on-year. In addition, China encouraged small and medium-sized commercial banks to replenish capital through multiple measures, including bringing in strategic investors and issuing perpetual bonds. The government also allowed local governments to issue special-purpose bonds to help small regional banks replenish capital.

The country has also continued to increase the quality and efficiency of financial institutions to serve the real economy, and gave full support to the establishment of a new development pattern.

Last year, China's bank loans to private companies and the manufacturing sector increased by 5.7 trillion yuan and 2.2 trillion yuan year-on-year, respectively. Its loans to micro and small enterprises whose total credit lines are up to 10 million yuan per borrower rose 30.9 percent from 2019. During the same period, bank loans to the scientific research and technology services industry went up 20.1 percent, said Liang Tao, vice-chairman of CBIRC.