Chinese banks lend less in April
Print Edition
BANKS in China lent less than expected in April while money supply grew at its slowest in 17 years amid weak economic momentum.
The situation may prompt the People’s Bank of China to again cut interest rates and bank reserve requirement to support economic growth, analysts said.
Banks lent 707.9 billion yuan (US$114.1 billion) in yuan loans in April, 185.5 billion yuan more than the same month last year but nearly 500 billion yuan below March’s lending, the PBOC said in a statement yesterday.
The lending also fell below market hopes for 903 billion yuan according to a Reuters poll of economists.
M2, the broad measure of money supply, rose 10.1 percent in April from a year ago, slowing from March’s 11.6 percent and missing the official target of 12 percent.
The growth was the slowest since records began in 1998.
“The growth of money supply is far below market expectations. This somehow reflects weakness in credit demand and potential capital outflow,” said Cao Yang, a senior analyst of Shanghai Pudong Development Bank.
“The volume of bank lending was insufficient to boost the economy, and a breakdown of the loan structure shows only a third of the loans are long term, putting downward pressure in companies’ investment activities.”
Cao said more monetary easing measures are required to support the economy and the PBOC is likely to offer loans to policy banks and cut banks’ reserve requirement to boost money supply.
The PBOC data also showed April’s total social financing, the broadest measure of credit supply that includes loans, bank acceptance bills, corporate bonds and equity financing, amounted to 1.05 trillion yuan in April, 188.1 billion yuan less than March and 448.8 billion yuan below April last year.
The National Bureau of Statistics yesterday reported lower-than- expected industrial production and slower retail and investment growth.
Earlier data showed exports declined 6.2 percent in April from a year earlier and imports decreased 16.1 percent while the official index for manufacturing activities was unchanged last month from March and services weakened.
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