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August 14, 2018

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Banks extend US$211b in net new yuan loans

Chinese banks extended 1.45 trillion yuan (US$210.69 billion) in net new yuan loans in July, above analysts’ expectations.

China’s policy-makers have been working on measures to encourage banks to lend more cash to medium and small firms, but there are signs that lenders are turning cautious as defaults rise, complicating efforts to channel money to sectors that need it.

The stronger-than-expected lending data was released by China’s banking and insurance regulator.

Analysts polled by Reuters had predicted new yuan loans of 1.2 trillion yuan, down sharply from June’s 1.84 trillion yuan.

China’s banks extended a record 13.53 trillion yuan in new loans last year, and lent 9.03 trillion yuan in the first half of this year, a jump of 13 percent from the same period of 2017.

Household loans, mostly mortgages, fell to 634.4 billion yuan in July from 707.3 billion yuan in June, according to the central bank’s data.

Household loans took up 43.8 percent of total new loans in July, versus 38.4 percent in June. Corporate loans fell to 650.1 billion yuan in July from 981.9 billion yuan a month earlier. Chinese banks usually make few loans in July after traditionally ramping up lending in June.

Broad M2 money supply grew 8.5 percent in July from a year earlier — the highest in five months, data from the People’s Bank of China showed yesterday, beating forecasts for a growth of 8.2 percent and compared with a record low of eight percent in June.

Outstanding yuan loans grew 13.2 percent from a year earlier, faster than an expected 12.8 percent rise and compared with a rise of 12.7 percent in June.

China’s total social financing, a broad measure of credit and liquidity in the economy, fell to 1.04 trillion yuan in July from 1.18 trillion yuan in June, central bank data showed yesterday.

The PBOC has been pumping out more cash to encourage bank lending. It has cut banks’ reserve requirements three times this year, with the latest reduction on July 5 freeing up 700 billion yuan in liquidity. It also lent a net 905.5 billion yuan to financial institutions via its medium-term lending facility in June and July, central bank data showed.


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