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 China's non-performing loans in the banking industry are expected to slightly increase in the second quarter, but the risks are controllable, the country's banking regulator said Wednesday.

China's bad loans inched up amid the outbreak and may continue to rise in the second quarter, said Xiao Yuanqi, chief risk officer of the China Banking and Insurance Regulatory Commission, adding that the country has taken measures to mitigate these risks.

The non-performing loan ratio of China's banks stood at 2.04 percent in the first quarter, up 0.06 percentage points from the beginning of this year. The rise was faster in some small and micro businesses as well as the catering and accommodation industries, which have been hit hard by the coronavirus outbreak.

The risks are under control as business activities have gradually resumed and more than 6 trillion yuan (about $847 billion) in provision fund has been set aside to fend off the potential risks, said Xiao.

Efforts are also made to conduct stress tests, intensify bad loan disposals, and require banks to support the work resumption of enterprises, he added.