Banks’ commercial real estate woes in China to persist for two more years: report

Property developers just posted their worst first-half earnings in over a decade.

Banks’ real estate woes in China are expected to continue at least over the next two years, as the “massive” correction to the local commercial real estate market will likely last that long, according to HSBC CEO Noel Quinn.
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“It’s a faster correction and a more decisive one than I was expecting, or I think anyone was expecting, and I think it’s got quite a while to go before it really stabilizes,” Quinn said at a Bank of America conference on 20 September. “You could be looking at another two plus years of correction.”

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In August, HSBC CFO Ewen Stevenson said that it would have to take further charges against its $12b exposure to commercial real estate in China, as a third of those assets are “substandard” or “impaired.” 

China’s property developers posted their worst first-half earnings in over a decade. A clampdown on leverage, China’s strict Covid Zero policy and a weakening economy are to blame for much of the fallout in the property sector this year. 

Here’s more from Bloomberg.