China's banking sector faces challenges as the government urges banks to support struggling property firms, potentially leading to increased bad loans and low net interest margins. The sector is estimated to face an additional $89 billion in bad real estate debt provisioning for 2024, causing banks to consider lowering growth targets and reducing jobs. Despite relief measures, the margin squeeze is expected to intensify, impacting earnings, raising concerns about national service and credit risks, particularly for regional banks.

China's Banking Sector Challenges