BEIJING: New bank loans in China fell in April from the previous month as the COVID-19 pandemic rattled the economy and weakened demand for credit, central bank data showed on Friday (May 13), after she pledged to step up her support to stave off a sharper downturn.
Chinese banks extended 645.4 billion yuan ($95.14 billion) in new yuan-denominated loans in April, down about 80% from March and below analysts’ expectations, data showed. the People’s Bank of China.
Analysts polled by Reuters had predicted new yuan lending would fall to 1.52 trillion yuan in April, down from 3.13 trillion yuan the previous month and 1.47 trillion yuan a year earlier.
“Lending was much weaker than expected last month as lockdowns weighed on credit demand. This should prompt the PBOC to announce further easing measures soon,” Capital Economics said in a note.
“But the central bank continues to signal a relatively moderate approach.”
The powerhouse said the sharp slowdown in new lending in April reflected the impact of COVID-19 on the real economy.
“Companies, especially small, medium and micro enterprises, have had more difficulties in operating and the demand for effective financing has decreased significantly,” he said.
Full or partial shutdowns to stop the spread of COVID-19 in dozens of Chinese cities, including a city-wide shutdown in the commercial center of Shanghai, have hit the economy hard.
To cushion a sharp slowdown in economic growth, the central bank reduced the amount of cash banks must hold as reserves from April 25, and more modest easing measures are expected.
The central bank said on Monday it would step up support for the slowing economy, while closely monitoring domestic inflation and monitoring policy adjustments in developed economies.
M2 broad money supply rose 10.5% from a year earlier, central bank data showed, above Reuters poll estimates of 9.9%. M2 rose 9.7% in March compared to a year ago.
Outstanding yuan loans rose 10.9 percent in April from a year earlier, from 11.4 percent in March. Analysts were expecting growth of 11.4%.
Growth in the total stock of social finance (TSF), a broad measure of credit and liquidity in the economy, slowed to 10.2% in April from a year earlier and 10.6% in March.
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 April, the TSF fell to 910.2 billion yuan from 4.650 billion yuan in March. Analysts polled by Reuters had expected an April TSF of 2.15 trillion yuan.