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China’s largest banks are expected to report the first profit drop in a long time due to the pandemic. This is in part due to government pressure to help small businesses.
While Chinese banks have had it good in recent years, the government in June asked them to help struggling businesses by sacrificing approximately $212 billion in profit by way of lowering lending rates and fees and deferring loan payments. And when the Chinese government “asks” something, it’s not really asking in the normal use of the word. As a result, the banks will post a 9.4% fall in profit from the first half of the year.
