Banks lend more in May and M2 rises fastest pace recorded this year
Print Edition
BANKS in China lent surprisingly more in May from a year ago and the country’s money supply accelerated, evidence the central bank is adopting an easy monetary stance to back economic growth.
New yuan-denominated loans totaled 870.8 billion yuan (US$140 billion) last month, up 201.4 billion yuan from May last year but nearly 100 billion yuan below April’s, the People’ Bank of China said in a statement yesterday.
M2, a broad measure of money supply that covers cash in circulation and all deposits, rose 13.4 percent from May last year, the fastest pace recorded this year. It was also faster than 13.2 percent in April and above the official annual target of 13 percent.
The lending beat market hopes for 750 billion yuan and the M2 growth exceeded expectations for 13.1 percent, according to a Reuters poll.
“China’s new lending came in higher than expected, possibly because the policy banks dispersed loans for shanty town rebuilding projects quickly,” ANZ said in a report yesterday.
“In addition, targeted reserve requirement ratio cut may increase bank lending, although the contribution should be insignificant given that the affected banks are small in terms of assets.”
The PBOC in April cut reserve requirements for county level rural banks to boost lending to agricultural businesses, while the central bank was reported to have injected 300 billion yuan through relending facility to support rebuilding projects.
Meanwhile, the broadest measure of credit supply including loans, bank acceptance bills, corporate bonds and equity financing, totaled 1.4 trillion yuan in May, up 217.4 billion yuan year on year, the PBOC said yesterday.
Fiscal spending surged 25 percent in May, above a 9.6 percent rise recorded in the first four months of this year, according to Ministry of Finance data released on Wednesday.
The ministry has ordered various local governments to accelerate spending to support projects in sectors including agricultural and infrastructure.
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