Bank lending slips below estimates
By Feng Jianmin |
March 10, 2012, Saturday
|
Print Edition
Print Edition
CHINA'S bank lending in February fell below expectations, indicating signs of cooling economic growth and the central bank's reluctance to ease liquidity, economists said.
Commercial banks in China extended a combined 710.7 billion yuan (US$112.8 billion) in new local currency loans in February, the People's Bank of China said in a statement yesterday. That compared with 738.1 billion yuan a month earlier and 535.6 billion yuan a year earlier. Lending in February was also below the 750 billion yuan median estimate in Bloomberg News and Reuters surveys.
Economists said the higher-than-usual lending size was partly due to fewer working days in January on account of the Spring Festival holiday and the PBOC cutting the reserve requirement ratio, but the lower-than-expected volume indicated weaker demand for credit due to the economic slowdown.
"The growth rate of lending in February was relatively slow. Insufficient demand for credit was due to weaker overseas demand, pessimistic outlook for company earnings and curbs on loans to property developers," said E Yongjian, a Bank of Communications researcher.
He Yifeng, an analyst at Hongyuan Securities, also attributed the lower volume to tighter controls on local government financing through fundraising vehicles.
M2, the broadest measure of money supply, rose 13 percent from a year earlier, 0.4 percentage point faster than January, but was still below the central bank's official target of 14 percent.
BOCom's E said lending may increase in March due to seasonal recovery of manufacturing activities and the PBOC may cut reserve requirements up to three times this year.
The 20-month-low inflation of 3.2 percent has allowed more room for easier monetary policies, but any large-scale stimulus plan or interest rate cut is unlikely due to lingering inflationary pressure, experts say.
Commercial banks in China extended a combined 710.7 billion yuan (US$112.8 billion) in new local currency loans in February, the People's Bank of China said in a statement yesterday. That compared with 738.1 billion yuan a month earlier and 535.6 billion yuan a year earlier. Lending in February was also below the 750 billion yuan median estimate in Bloomberg News and Reuters surveys.
Economists said the higher-than-usual lending size was partly due to fewer working days in January on account of the Spring Festival holiday and the PBOC cutting the reserve requirement ratio, but the lower-than-expected volume indicated weaker demand for credit due to the economic slowdown.
"The growth rate of lending in February was relatively slow. Insufficient demand for credit was due to weaker overseas demand, pessimistic outlook for company earnings and curbs on loans to property developers," said E Yongjian, a Bank of Communications researcher.
He Yifeng, an analyst at Hongyuan Securities, also attributed the lower volume to tighter controls on local government financing through fundraising vehicles.
M2, the broadest measure of money supply, rose 13 percent from a year earlier, 0.4 percentage point faster than January, but was still below the central bank's official target of 14 percent.
BOCom's E said lending may increase in March due to seasonal recovery of manufacturing activities and the PBOC may cut reserve requirements up to three times this year.
The 20-month-low inflation of 3.2 percent has allowed more room for easier monetary policies, but any large-scale stimulus plan or interest rate cut is unlikely due to lingering inflationary pressure, experts say.
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