Credit demand spurs bank lending to rise
Source: Xinhua/Shanghai Daily |
June 12, 2012, Tuesday
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Print Edition
Print Edition
BANK lending in China rose in May, exceeding market expectations, as demand for credit increased due to the country's efforts to boost a slowing economy.
Banks extended yuan-denominated loans of 793.2 billion yuan (US$125 billion) in May, up 241.6 billion yuan from that of last year, the People's Bank of China said on its website yesterday.
That compared with 681.8 billion yuan in April and economists' expectations of 700 billion yuan according to a Bloomberg News survey.
"The increased size of lending was a result of macro-economic policies leaning toward stabilizing economic growth," said E Yongjian, a researcher with the Bank of Communications. "Approval on projects were faster, and credit demand especially in western regions grew."
He noted that more deposits in May, which increased by 1.22 trillion yuan, 114.3 billion yuan more than same month last year, also contributed to the boom.
Cai Yanfei, an analyst with Industrial Securities, said the rise in the medium and long-term loans shows that the government and enterprises are making more investments.
Medium and long-term loans rose in May, with 31.6 percent in non-financial sectors, up from 23.6 percent in April.
Banks' lending capacity may rise following the central bank's move to give more flexibility for banks to set deposit and lending rates.
"Both lending and deposits will increase further after the recent interest rate adjustment, and economic activity will become more vigorous," said Liu Weiming, an analyst with China Citic Bank.
Most analysts expect more monetary loosening ahead, as key economic data for May released over the weekend showed no improvement in investment and consumption, the country's two economic drivers, intensifying market concerns over a further slowdown in the world's second-largest economy.
Analysts estimated China has room for one or two cuts in bank reserve requirements this year as inflation cools, and total lending this year may be between 8 trillion and 8.5 trillion yuan.
M2, the broadest measure of money supply, rose by 13.2 percent in May, 0.4 percentage point faster than April's.
The growth was lower than the 14 percent annual target set by the government for this year.
Banks extended yuan-denominated loans of 793.2 billion yuan (US$125 billion) in May, up 241.6 billion yuan from that of last year, the People's Bank of China said on its website yesterday.
That compared with 681.8 billion yuan in April and economists' expectations of 700 billion yuan according to a Bloomberg News survey.
"The increased size of lending was a result of macro-economic policies leaning toward stabilizing economic growth," said E Yongjian, a researcher with the Bank of Communications. "Approval on projects were faster, and credit demand especially in western regions grew."
He noted that more deposits in May, which increased by 1.22 trillion yuan, 114.3 billion yuan more than same month last year, also contributed to the boom.
Cai Yanfei, an analyst with Industrial Securities, said the rise in the medium and long-term loans shows that the government and enterprises are making more investments.
Medium and long-term loans rose in May, with 31.6 percent in non-financial sectors, up from 23.6 percent in April.
Banks' lending capacity may rise following the central bank's move to give more flexibility for banks to set deposit and lending rates.
"Both lending and deposits will increase further after the recent interest rate adjustment, and economic activity will become more vigorous," said Liu Weiming, an analyst with China Citic Bank.
Most analysts expect more monetary loosening ahead, as key economic data for May released over the weekend showed no improvement in investment and consumption, the country's two economic drivers, intensifying market concerns over a further slowdown in the world's second-largest economy.
Analysts estimated China has room for one or two cuts in bank reserve requirements this year as inflation cools, and total lending this year may be between 8 trillion and 8.5 trillion yuan.
M2, the broadest measure of money supply, rose by 13.2 percent in May, 0.4 percentage point faster than April's.
The growth was lower than the 14 percent annual target set by the government for this year.
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