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Fitch Ratings: New lending may drop in China this year
By Hu Xiaocen |
June 5, 2012, Tuesday
|
Online Edition
Online Edition
BROAD credit growth in China is decelerating and new lending in 2012 may fall below the previous year for the first time since 2008, Fitch Ratings said today.
"Broad credit growth began to moderate in the second half of 2011, and this slowdown has accelerated in 2012," Charlene Chu, head of Chinese bank ratings for the agency, said in a report published today. "Weakening demand for credit as well as resource constraints from thinning bank liquidity have weighed on bank lending."
The agency said the slowdown in credit comes in line with an equivalent moderation in Gross Domestic Product growth, suggesting the economic return on credit remains weak. It estimated that each yuan in new financing this year will yield only 0.39 yuan in new GDP, a sharp fall from 0.73 yuan before the global crisis began.
China Securities Journal reported today moderate growth in new lending last month. The country's "big four" lenders, Industrial and Commercial Bank of China, China Construction Bank Corp, Bank of China and Agricultural Bank of China, extended 253 billion yuan (US$39.8 billion) of combined new loans in May. Estimated total lending was 700 billion yuan across financial institutions, compared to 682 billion yuan in April, the newspaper said.
"Broad credit growth began to moderate in the second half of 2011, and this slowdown has accelerated in 2012," Charlene Chu, head of Chinese bank ratings for the agency, said in a report published today. "Weakening demand for credit as well as resource constraints from thinning bank liquidity have weighed on bank lending."
The agency said the slowdown in credit comes in line with an equivalent moderation in Gross Domestic Product growth, suggesting the economic return on credit remains weak. It estimated that each yuan in new financing this year will yield only 0.39 yuan in new GDP, a sharp fall from 0.73 yuan before the global crisis began.
China Securities Journal reported today moderate growth in new lending last month. The country's "big four" lenders, Industrial and Commercial Bank of China, China Construction Bank Corp, Bank of China and Agricultural Bank of China, extended 253 billion yuan (US$39.8 billion) of combined new loans in May. Estimated total lending was 700 billion yuan across financial institutions, compared to 682 billion yuan in April, the newspaper said.
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