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May 10, 2019

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China’s new bank loans stumble in April

China’s credit growth took a breather in April after a strong March as new yuan loans and aggregate financing fell below expectations, the central bank data showed yesterday.

April’s new bank loans were 1.02 trillion yuan (US$150 billion), 161.5 billion yuan less than the same period last year. The loan also eased compared with a recent high of 1.69 trillion yuan in March, according to data from the People’s Bank of China.

The main issue was softer corporate borrowing, said UBS China’s research team. Data showed new yuan-denominated loans to the corporate sector was only 347.1 billion yuan, dragged by both a decline in short-term loans and weaker medium- and long-term loans. Bank lending to non-banking financial institutions, however, increased about 142 billion yuan.

New household loans stayed steady at 526 billion yuan last month, with over three quarters of the growth from demand for medium- and long-term loans (mainly mortgages), as China’s property sales stabilized in recent months.

The slower pace of credit expansion also weighed on the growth of total social financing in the month. In April, aggregate financing slumped to a weaker-than-expected 1.36 trillion yuan from 2.86 trillion yuan in March.

Part of the slowdown is “seasonable,” said Julia Wang, an economist at HSBC China, as April is traditionally a weaker month for lending. And there has been some tightening of liquidity in the interbank market over the month.

HSBC predicted that broad credit growth will likely continue to recover at a modest pace in the coming months and borrowing costs for corporations will likely continue to ease.


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