Bank loans

UPDATE 2 – China March New Bank Loans Jump, Overall Credit Growth Picks Up

* March new loans 3.13 trln yuan against f’cast 2.68 trln yuan

* March Money supply M2 +9.7% y/y, against f’cast of +9.2%

* March TSF 4.65 trillion yuan, vs f’cast 3.7 trillion yuan

* C.bank maintains accommodative policy to support growth (adds details, analyst comment)

By Judy Hua and Kevin Yao

BEIJING, April 11 (Reuters) – New bank lending in China rose more than expected in March as overall credit growth accelerated from the previous month as the central bank maintained its accommodative policy to support the downturn in the economy.

Chinese banks extended 3.13 trillion yuan ($492 billion) in new yuan loans in March, up sharply from February and beating analysts’ expectations, according to data released Monday by the People’s Bank of China.

Analysts polled by Reuters had predicted new yuan lending would rise to 2.68 trillion yuan in March. New loans were over 2.73 trillion yuan a year earlier.

That pushed first-quarter bank lending to a record 8.34 trillion yuan, up 8.7% from 7.67 trillion yuan in the first quarter of 2021 – the previous record.

“Bank lending and total social finance grew more than expected in March. This confirms that the government has eased monetary policy,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management.

“Strong credit supply is helpful, but the economy is likely to remain weak with many cities in lockdown. The outlook for COVID outbreaks and zero tolerance policy (COVID) is the most significant uncertainty the economy faces. confronted.”

Household loans, mostly mortgages, reached 753.9 billion yuan in March, after contracting 336.9 billion yuan in February, while corporate loans jumped to 2.480 billion yuan last month from 1.24 trillion yuan in February.

Last week, China’s cabinet hinted at the prospect of new measures to support the economy under pressure from fresh COVID-19 outbreaks and a slowing global recovery.

MODEST RELAXATION EXPECTED

To boost growth, the central bank cut interest rates and the reserve requirement ratio (RRR) for banks, with further easing measures expected.

“Credit growth will likely continue to accelerate in the coming months amid lower borrowing costs and support for the housing market,” Capital Economics’ Sheana Yue said in a note.

“We believe policy easing will continue in the near term,” Yue said, expecting the central bank to cut the rate on its medium-term lending facility (MLF) by 10 basis points as early as Friday.

M2 broad money supply rose 9.7% in March from a year earlier, central bank data showed, above Reuters poll estimates of 9.2%. M2 rose 9.2% in February compared to a year ago.

Outstanding yuan loans rose 11.4 percent in March from a year earlier, compared with 11.4 percent growth in February. 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, accelerated to 10.6% in March from a year earlier and to 10, 2% in February.

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 March, the TSF rose sharply to 4.65 trillion yuan from 1.19 trillion yuan in February. Analysts polled by Reuters had expected a March TSF of 3.7 trillion yuan.

(Reporting by Judy Hua and Kevin Yao; Editing by Barbara Lewis and Susan Fenton)