Bank loans

China’s new October bank loans are expected to halve from the previous month – Reuters poll

BEIJING: New bank lending to China is expected to have plunged in October from the previous month, but yuan lending is expected to be higher than a year earlier, a Reuters poll showed, as the central bank wary of the policy easing amid stagflation concerns. .

It is estimated that Chinese banks issued 800 billion yuan ($ 125.04 billion) in new net loans in yuan last month, up from 1.66 trillion yuan in September, according to the median estimate of the survey conducted. from 26 economists.

It would be more than 689.8 billion yuan issued in the same month a year earlier.

Central Bank Governor Yi Gang said last month that China’s money supply and total social finance growth was largely in line with nominal GDP growth, and liquidity is plentiful.

The People’s Bank of China (PBOC) will likely act with caution in easing monetary policy to support the economy, as slowing economic growth and surging factory inflation fuel concerns about stagflation, have said political sources and analysts.

Some Chinese banks have accelerated the disbursement of mortgage loans in some cities, but no wave of new loans has yet been triggered amid strong regulatory pressure to deleverage the sector.

Momentum is weakening in the world’s second-largest economy due to new restrictions to control COVID-19 outbreaks, power shortages that have hit factories and a debt crisis in the real estate sector, among other factors that hampered activity.

The PBOC announced on Monday that it would provide financial institutions with low-cost loans to help companies reduce their carbon emissions, thereby supporting the country’s long-term carbon neutrality goals.

Goldman Sachs analysts have estimated that the PBOC could provide around 1,200 billion yuan in financial support in the coming year.

The annual outstanding yuan loans are expected to increase 11.9% in October, as in September, according to the survey. The growth of the broad money supply M2 in October was 8.3%, as in the previous month.

Chinese local governments issued 2.370 billion yuan net of special bonds in the first nine months, according to data from the Ministry of Finance.

The government will seek to issue 2022 Special Local Government Bonds promptly.

Any acceleration in government bond issuance could help boost Total Social Finance (TSF), a broad measure of credit and liquidity. The exceptional growth of the TSF slowed to 10.0% in September, the weakest pace since at least 2017.

In October, TSF is expected to fall to 1.6 trillion yuan from 2.9 trillion yuan the previous month.

(US $ 1 = 6.3980 Chinese yuan)

(Reporting by Judy Hua and Kevin Yao; Editing by Sherry Jacob-Phillips)