New bank loans in China nearly double after central bank aid

  • Seven new loans 2.47 trln yuan against f’cast 1.80 trln yuan
  • Money supply Sept M2 +12.1% y/y, vs f’cast of +12.1%
  • Seven TSF 3.53 trillion yuan, vs f’cast 2.73 trillion yuan
  • C.bank is gradually easing its policy to stimulate growth

BEIJING, Oct 11 (Reuters) – New bank lending in China nearly doubled in September from a month earlier and far exceeded expectations after the central bank acted to stimulate an economy weakened by a housing crisis and a resurgence in cases of COVID-19.

Chinese banks extended 2.47 trillion yuan ($344.58 billion) in new yuan loans in September, up from 1.25 trillion yuan in August, data from the People’s Bank of China showed on Tuesday.

Analysts polled by Reuters had predicted new yuan lending would rise to 1.8 trillion yuan in September. New loans also topped 1.66 trillion yuan a year earlier.

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Policymakers are bracing for a recovery in the world’s second-largest economy, which narrowly escaped a contraction in the second quarter, as COVID surges and a deepening housing crisis weigh on the outlook.

“Credit expansion for infrastructure, manufacturing, real estate and other sectors will strongly support credit and total social finance growth in the fourth quarter, helping to keep economic activity within a reasonable range,” he said. said Wen Bin, chief economist at Minsheng Bank.

Household loans, including mortgages, reached 650.3 billion yuan in September from 458 billion yuan in August, while corporate loans soared to 1.920 billion yuan from 875 billion yuan, according to central bank data.

New yuan loans totaled 18.08 trillion yuan in the first nine months, up 1.36 trillion yuan from a year earlier, central bank data showed.

The central bank said in late September it would step up efforts to shore up an economic recovery, citing risks to the global economy and pledging to implement prudent monetary policy and maintain ample liquidity.

In August, the central bank cut the one-year loan prime rate (LPR), its benchmark lending rate, by 5 basis points, and lowered the five-year LPR by a larger margin. Read more

The central bank also in September lowered the interest rate on housing provident fund loans by 15 basis points for first-time home buyers from October 1, in a bid to support the struggling housing market. . Read more

M2 broad money supply in September rose 12.1% from a year earlier, central bank data showed, in line with analysts’ forecasts in a Reuters poll. It rose 12.2% in August.

Outstanding yuan loans rose 11.2 percent in September from a year earlier, compared to August’s 10.9 percent growth, which was in line with expectations.

GENERAL CREDIT GROWTH IS ACCELERATING

The central bank faces limited space to further ease policy amid concerns over capital flight, as the US Federal Reserve and other major central banks aggressively raise interest rates in a bid to contain the surge in inflation.

Chinese authorities are stepping up their efforts on infrastructure, dusting off an old playbook by issuing debt to finance major public works projects to revive the economy.

Local governments issued net 3.52 trillion yuan of special bonds in the first eight months, according to data from the Ministry of Finance, as authorities accelerated the issuance of special bonds for infrastructure .

Growth in the total stock of social finance (TSF), a broad measure of credit and liquidity in the economy, accelerated to 10.6% in September from 10.5% in August.

The TSF includes forms of off-balance sheet financing that exist outside of the conventional bank lending system, such as initial public offerings, trust company loans, and bond sales.

In September, the TSF rose to 3.53 trillion yuan from 2.43 trillion yuan in August. Analysts polled by Reuters had expected a September TSF of 2.73 trillion yuan.

($1 = 7.1682 Chinese yuan renminbi)

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Reporting by Judy Hua and Kevin Yao; edited by Barbara Lewis and Jonathan Oatis

Our standards: The Thomson Reuters Trust Principles.

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