A troubled Chinese bank said it would skip a year’s worth of interest payments to international bondholders, days after reporting that losses and problem loans had soared.

Bank of Jinzhou is the first Chinese lender to protect its financial health by using this provision on its additional tier-1 dollar bonds, analysts said. A form of “contingent convertible,” or CoCo, these bonds are widely used by lenders in Europe and Asia to shore up their financial positions. If a bank runs low on capital, it can withhold coupon payments...