Bank loans

New Chinese bank lending hit record high in January as Cenbank eases policy

  • Jan new loans 3.98 trln yuan vs f’cast 3.69 trln yuan
  • Money supply Jan M2 +9.8% y/y, vs f’cast of +9.2%
  • Jan TSF 6.17,000,000 yuan, compared to 5.46,000,000 yuan f’cast
  • C.bank eases policy to support slowing economy

BEIJING, Feb 10 (Reuters) – New bank lending in China more than tripled in January from a month earlier, beating forecasts and hitting a record high, as the central bank seeks to support slowing global growth. world’s second largest economy.

Chinese banks extended 3.98 trillion yuan ($626 billion) in new yuan loans in January, up from 1.13 trillion yuan in December, according to data released Thursday by the People’s Bank of China.

Chinese lenders tend to make loans early in the year to get better quality customers and gain market share.

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Analysts polled by Reuters had predicted new yuan lending would climb to 3.69 trillion yuan in January. New loans were over 3.58 trillion yuan a year earlier.

“The market is concerned that the policy stimulus in this cycle will not be as strong and effective as in previous cycles. I think this dataset helps address part of the concern but not the entirety of the problem,” said Zhiwei Zhang, chief economist at Precision Asset Management.

“I expect further policy easing steps in the coming months. There could be more RRR (required reserve ratio) and rate cuts, and financing for property developers is also essential to to watch.”

China’s economy has cooled over the past year and faces multiple headwinds as a real estate slowdown hurts investment and the country’s efforts to contain local cases of the highly contagious variant of Omicron weigh on consumption.

The central bank cut reserve requirement ratios for banks, along with borrowing costs for its medium-term lending facility (MLF) and the prime lending rate – the benchmark lending rate – and others. easing measures are expected. Read more

The authorities slightly eased financing restrictions for property developers and accelerated the issuance of mortgages for homebuyers.

Household loans, mainly mortgages, rose to 843 billion yuan in January from 371.6 billion yuan in December, while corporate loans jumped to 3.360 billion yuan from 662 billion yuan.

FURTHER RELAXATION STEPS EXPECTED

M2 broad money supply in January rose 9.8% from a year earlier – the strongest expansion since February 2021, according to central bank data, above estimates of 9.2% forecast in the Reuters poll. It increased by 9.0% in December.

Outstanding yuan loans rose 11.5 percent from a year earlier, compared to December’s growth of 11.6 percent. Analysts were expecting growth of 11.6%.

Growth in the total stock of social finance (TSF), a broad measure of credit and liquidity in the economy, accelerated to a six-month high of 10.5% in January, from 10, 3% in December.

“Credit growth will likely continue to accelerate in the coming months amid lower borrowing costs, an easing of the fiscal stance and an easing of regulatory constraints on mortgage lending,” said Julian Evans-Pritchard of Capital Economics in a note.

“We believe this policy easing will continue in the near term and expect a second cut in the PBOC MLF rate next week.”

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 January, TSF jumped to 6.17 trillion yuan from 2.37 trillion yuan in December. Analysts polled by Reuters had expected a January TSF of 5.46 trillion yuan.

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Reporting by Judy Hua and Kevin Yao; Editing by Toby Chopra

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