Bank loans

China October New bank loans fall less than expected, mortgages rise | Investment News

By Judy Hua and Kevin Yao

BEIJING (Reuters) – New bank lending in China fell sharply in October from the previous month, but not as badly as analysts expected, expecting the central bank to cautiously ease monetary policy amid the risks. of stagflation.

Data released by the People’s Bank of China on Wednesday showed banks extended 826.2 billion yuan ($129.27 billion) in new loans in October, down sharply from 1.66 trillion in September. , but better than the 800 billion expected in a Reuters poll of analysts.

New loans were over 689.8 billion yuan a year earlier.

“There are signs that PBOC policy is becoming more supportive in response to tensions in the real estate sector. As such, we believe this could be the trough in credit growth,” Capital Economics said in a statement. note.

“But the usual lags mean tight credit conditions will remain a drag on economic activity for some time.”

Outstanding yuan loans rose 11.9 percent from a year earlier, in line with expectations and the lowest since May 2002.

Last month, central bank governor Yi Gang said growth in China’s money supply and total social finance broadly matched nominal GDP growth and that liquidity was plentiful.

The PBOC should act cautiously on easing monetary policy to support the economy as slowing economic growth and soaring factory inflation fuel concerns about stagflation, policy sources said. and analysts.

Wen Bin, senior economist at Minsheng Bank, said he expected the central bank to rely on short-term targeted policy tools to support small businesses and some other sectors.

On Monday, the PBOC said it would provide low-cost loans to financial institutions to help businesses reduce carbon emissions, supporting China’s long-term carbon neutrality goals.

Goldman Sachs analysts have estimated that the PBOC could provide around 1.2 trillion yuan in financial support over the coming year.

Household loans, mainly mortgages, fell to 464.7 billion yuan in October from 788.6 billion yuan in September, while corporate loans fell to 310.1 billion yuan from 980.3 billion yuan, according to central bank data.

“Medium and long-term household loans have exceeded medium and long-term corporate loans, indicating that the pace of housing loan issuance is accelerating,” said Zhou Hao, senior economist at Commerzbank. .

New mortgage loans reached 348.1 billion yuan in October, up 101.3 billion yuan from September, the central bank said.

Growth in total social finance (TSF), a broad measure of credit and liquidity in the economy, was 10.0% in October, unchanged from September.

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

In October, the TSF fell to 1.59 trillion yuan from 2.9 trillion yuan in September. Analysts polled by Reuters had expected an October TSF of 1.6 trillion yuan.

M2 broad money supply rose 8.7% from a year earlier, central bank data showed, above the Reuters poll forecast of 8.3%. M2 increased by 8.3% in September.

Factory gate inflation in China hit a 26-year high in October as coal prices soared amid power shortages in the industrial heartland, further squeezing profit margins for producers and accentuating fears of stagflation.

(Reporting by Judy Hua and Kevin Yao; Editing by Simon Cameron-Moore and Alison Williams)

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