Bank loans

UPDATE 2-China June new bank loans jump as Beijing steps up policy support

* June new loans 2.81 trln yuan against f’cast 2.40 trln yuan

* Money supply M2 June +11.4% y/y, vs f’cast of +11.0%

* June TSF 5.17 trln yuan, against f’cast 4.20 trln yuan

* China c.bank pledges to support economic recovery (adds details, analyst comment)

By Kevin Yao

BEIJING, July 11 (Reuters) – New bank lending in China surged in June, rising more than expected, as general credit growth accelerated as the central bank stepped up efforts to revive the crisis-hit economy. pandemic.

Chinese banks extended 2.81 trillion yuan ($419.3 billion) in new yuan loans in June, up from May and beating analysts’ expectations, data from the People’s Bank of China showed Monday. New loan volume was the highest since March.

Analysts polled by Reuters had predicted new yuan lending at 2.4 trillion yuan in June, up from 1.89 trillion yuan in May and 2.12 trillion yuan a year earlier.

Household loans, including mortgages, hit 848.2 billion yuan in June from 288.8 billion yuan in May, while corporate loans jumped to 2.21 trillion yuan from 1.53 trillion yuan. yuan in May, according to central bank data.

“The demand for corporate financing has improved as infrastructure investment policies boost medium- and long-term corporate lending,” said Zhou Guannan, an analyst at Huachuang Securities.

The rise in household lending reflects the recent softening in the housing market, she said.

Chinese banks extended 13.68 trillion yuan in new loans in the first six months of 2022, the highest number ever in the first half, according to central bank data.

The world’s second-largest economy has begun to recover from supply shocks caused by widespread shutdowns since the second quarter, although headwinds to growth persist.

Central bank governor Yi Gang pledged to maintain an accommodative monetary policy to support the economy, in line with a set of policy measures unveiled by the cabinet.

LIMITED ROOM FOR LODGING

But some analysts say the central bank has limited leeway, particularly on cutting interest rates, due to fears that the US Federal Reserve’s rate hike could divert capital away from China.

“The central bank will always maintain reasonably sufficient liquidity. There is not much the central bank can do, and all the tools that can be used are basically used.” said Luo Yunong, an analyst at Industrial Securities.

“If necessary, there is room for comprehensive policy measures.”

M2 broad money supply rose 11.4% from a year earlier – its fastest pace since November 2016 and the 11.0% predicted in the Reuters poll and the 11.1% a year ago .

Outstanding yuan loans were up 11.2% from a year earlier at the end of June, analysts expected growth unchanged from 11.0% in May.

The authorities granted political banks 800 billion yuan in new credit allowances and allowed them to issue 300 billion yuan in bonds to finance infrastructure projects.

The cabinet asked local governments to ensure that 3.45 trillion yuan of infrastructure special bond issuances are completed by the end of June, part of the 2022 special bond quota of 3.65 trillion yuan.

Any acceleration in government bond issuance could help boost total social finance (TSF), a large measure of credit and liquidity. Total outstandings at the end of June were up 10.8% year-on-year, with growth accelerating 10.5% in May and the fastest since June 2021.

The TSF includes off-balance sheet forms of financing, such as initial public offerings, trust company loans, and bond sales.

In June, the TSF rose to 5.17 trillion yuan from 2.79 trillion yuan in May. Analysts expected 4.2 trillion yuan. (Additional reporting by Ella Cao; Editing by Jacqueline Wong and Tomasz Janowski)