Bank loans

New bank loans in China fall more than expected, credit growth slows and more

  • July new loans 679 billion yuan against 1.10 trln yuan f’cast
  • New loans fall even as c.bank pledges to support growth
  • M2 money supply in July up 12% over one year, compared to 11.4% at the end of the year
  • July TSF 756.1 billion yuan, against f’cast 1.30 trln yuan

BEIJING, Aug 12 (Reuters) – New bank lending in China fell more than expected in July as general credit growth slowed amid fresh COVID surges, job concerns and a housing slump worsening has made businesses and consumers reluctant to take on more debt. .

Chinese banks extended 679 billion yuan ($101 billion) in new yuan-denominated loans in July, less than a quarter of the amount in June and below analysts’ expectations, according to data released Friday by the People’s Bank of China. (PBOC).

Analysts polled by Reuters had predicted new yuan lending would fall to 1.1 trillion yuan in July, from 2.81 trillion the previous month and 1.08 trillion a year earlier.

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Household loans, including mortgages, fell to 121.7 billion yuan in July from 848.2 billion in June, while corporate loans fell to 287.7 billion yuan from 2.210 billion.

China’s economy slowed sharply in the second quarter as widespread lockdowns weighed on demand and business activity, while the housing market swung from crisis to crisis.

The PBOC reiterated that it would intensify the implementation of its prudent monetary policy and maintain reasonably adequate liquidity, while closely monitoring changes in domestic and external inflation, it said in its report on the Politics.

A growing number of homebuyers have threatened to stop paying mortgages on hundreds of stalled projects. While regulators have urged banks to help provide funds to bridge the funding gap for developers, confidence in the sector remains fragile. Read more

RECENT TASTE

Data firm China Beige Book International, which conducts monthly surveys of more than 1,000 companies, said there was a sharp decline in demand for credit in July from manufacturing and service companies, with an uptick in retail, which she attributed largely to fears of more lockdowns. .

Some analysts point to a recent glut of liquidity in interbank money markets as a further sign of weakening credit demand.

M2 broad money supply rose 12% in July from a year earlier, central bank data showed, above Reuters poll estimates of 11.4%.

Outstanding yuan loans rose 11% from 11.2% in June. Analysts had expected growth to be unchanged from June.

Growth in total social finance (TSF), a broad measure of credit and liquidity in the economy, slowed to 10.7% in July from 10.8% in June.

Analysts expected the TSF to fall sharply last month as Beijing asked local governments to use up most of their annual special bond quotas by the end of June.

Local governments issued a net amount of 3.41 trillion yuan in special bonds in the first six months – part of the 2022 special bond quota of 3.65 trillion, according to data from the Ministry of Finance, while that the authorities were seeking to accelerate infrastructure spending.

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 July, the TSF fell to 756.1 billion yuan from 5.17 trillion in June. Analysts polled by Reuters had expected a July TSF of 1.3 trillion yuan.

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Reporting by Kevin Yao and Ella Cao; Editing by David Holmes

Our standards: The Thomson Reuters Trust Principles.

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