Loans and M2 climb in June
By Maggie Zhang |
July 13, 2011, Wednesday
|
Print Edition
Print Edition
Banks in China extended more loans in June, higher than estimates in a survey, and money supply in the country rose to a three-month high despite several rounds of tightening measures.
New yuan-backed loans totaled 633.9 billion yuan (US$98 billion) in June, a rise of 20.7 billion yuan from a year ago, the People's Bank of China said yesterday.
The amount was up from the 622.5 billion yuan medium estimate in a Bloomberg News survey and from 551.6 billion yuan in May.
The growth of M2, the broader measure of money supply, reached a three-month high of 15.9 percent last month, up from May's 15.1 percent.
The country's foreign-exchange reserves, the world's largest, rose to US$3.2 trillion at the end of June from US$3.04 trillion at the end of March, the central bank said on its website.
Despite the rise in June's credit and money growth, analysts said China's credit conditions are still tight.
"Both June's new loan and broad money supply numbers were stronger-than-expected," said Qu Hongbin, HSBC's chief economist in China, yesterday. "But we believe this is a temporary spike, brought about by a seasonal blip in banks' behavior at the end of each quarter."
Banks are known to increase lending to meet performance targets while also attracting new deposits to meet the loan-to-deposit ratio checks that are scheduled at the end of each quarter.
"Credit and money supply growth are still cooling in response to quantitative tightening measures," he added.
Qu said the central bank looks set to achieve its annual M2 growth target of 16 percent.
Barclays Capital also expects credit controls to continue so that M2 growth this year will be curbed at 16 percent and new loans at 7 trillion to 7.5 trillion yuan.
Total bank loans in the first half of the year totaled 4.17 trillion yuan, down 10 percent from a year ago, pointing to continued tight credit conditions, Barclays noted yesterday.
"While we think the rate-hike cycle is close to an end, we do not rule out the possibility of a fourth hike in the third quarter," Chang Jian, a Barclays' economist, said. "We think the room for more reserve requirement rate hikes is limited, although one or two increases are possible given liquidity pressures."
New yuan-backed loans totaled 633.9 billion yuan (US$98 billion) in June, a rise of 20.7 billion yuan from a year ago, the People's Bank of China said yesterday.
The amount was up from the 622.5 billion yuan medium estimate in a Bloomberg News survey and from 551.6 billion yuan in May.
The growth of M2, the broader measure of money supply, reached a three-month high of 15.9 percent last month, up from May's 15.1 percent.
The country's foreign-exchange reserves, the world's largest, rose to US$3.2 trillion at the end of June from US$3.04 trillion at the end of March, the central bank said on its website.
Despite the rise in June's credit and money growth, analysts said China's credit conditions are still tight.
"Both June's new loan and broad money supply numbers were stronger-than-expected," said Qu Hongbin, HSBC's chief economist in China, yesterday. "But we believe this is a temporary spike, brought about by a seasonal blip in banks' behavior at the end of each quarter."
Banks are known to increase lending to meet performance targets while also attracting new deposits to meet the loan-to-deposit ratio checks that are scheduled at the end of each quarter.
"Credit and money supply growth are still cooling in response to quantitative tightening measures," he added.
Qu said the central bank looks set to achieve its annual M2 growth target of 16 percent.
Barclays Capital also expects credit controls to continue so that M2 growth this year will be curbed at 16 percent and new loans at 7 trillion to 7.5 trillion yuan.
Total bank loans in the first half of the year totaled 4.17 trillion yuan, down 10 percent from a year ago, pointing to continued tight credit conditions, Barclays noted yesterday.
"While we think the rate-hike cycle is close to an end, we do not rule out the possibility of a fourth hike in the third quarter," Chang Jian, a Barclays' economist, said. "We think the room for more reserve requirement rate hikes is limited, although one or two increases are possible given liquidity pressures."
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