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Banks extend US$158b credit
By Zhang Fengming |
February 16, 2011, Wednesday
|
Print Edition
Print Edition
BANKS in China extended 1.04 trillion yuan (US$158 billion) of new yuan loans in January as lenders front-loaded loans on fears of further tightening.
M2, the broadest measure of money supply, rose 17.2 percent last month from a year earlier, the People's Bank of China said on its website yesterday. Growth in January's M2 was slower than December's 19.7 percent increase.
Although the loan figure was lower than previous speculations of 1.2 trillion yuan, the figure still grew briskly considering the forecast for lending would be around 7 trillion yuan in 2011.
China shifted its monetary policy from relatively loose to prudent this year to tame inflation and ward off asset price bubbles.
The PBOC has already raised the interest rate three times since October. The reserve requirement ratio on banks has risen seven times since 2010 (six times last year and once in January) to lock up liquidity.
So banks tend to lend strongly at the beginning of the year on fears of further tightening.
Confronting a shortage of credit, Industrial and Commercial Bank of China is the first in the industry to stop interest rate discounts to first-home buyers.
"Limited credit quota" is often quoted by credit officers to home buyers because of tight control over lending from the authorities.
Deutsche Bank said it expect China's loan growth to slow to 16 percent from last year's 19.9 percent. The rise in M2 is set to slow to 16.5 percent from 2010's 19.7 percent.
Banks in China extended 7.95 trillion yuan of yuan-denominated loans last year, beyond the official target of 7.5 trillion yuan.
"The central bank will need to be vigilant in managing inflation expectations," said Liu Ligang, an ANZ economist. "We think another reserve requirement hike is possible before the National People's Congress in early March."
Citigroup sees three more interest rate hikes this year, two in the first half and one in the second half.
"Owing to pressure from food and international commodity prices, wage increases, and pass-through from producer prices, we continue to think the official CPI target of 4 percent will be missed," Citigroup said in a note.
M2, the broadest measure of money supply, rose 17.2 percent last month from a year earlier, the People's Bank of China said on its website yesterday. Growth in January's M2 was slower than December's 19.7 percent increase.
Although the loan figure was lower than previous speculations of 1.2 trillion yuan, the figure still grew briskly considering the forecast for lending would be around 7 trillion yuan in 2011.
China shifted its monetary policy from relatively loose to prudent this year to tame inflation and ward off asset price bubbles.
The PBOC has already raised the interest rate three times since October. The reserve requirement ratio on banks has risen seven times since 2010 (six times last year and once in January) to lock up liquidity.
So banks tend to lend strongly at the beginning of the year on fears of further tightening.
Confronting a shortage of credit, Industrial and Commercial Bank of China is the first in the industry to stop interest rate discounts to first-home buyers.
"Limited credit quota" is often quoted by credit officers to home buyers because of tight control over lending from the authorities.
Deutsche Bank said it expect China's loan growth to slow to 16 percent from last year's 19.9 percent. The rise in M2 is set to slow to 16.5 percent from 2010's 19.7 percent.
Banks in China extended 7.95 trillion yuan of yuan-denominated loans last year, beyond the official target of 7.5 trillion yuan.
"The central bank will need to be vigilant in managing inflation expectations," said Liu Ligang, an ANZ economist. "We think another reserve requirement hike is possible before the National People's Congress in early March."
Citigroup sees three more interest rate hikes this year, two in the first half and one in the second half.
"Owing to pressure from food and international commodity prices, wage increases, and pass-through from producer prices, we continue to think the official CPI target of 4 percent will be missed," Citigroup said in a note.
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