China bank lending heads for a record
Chinese banks extended 794.6 billion yuan ($115.10 billion) in new yuan loans in November and look set to lend a record amount this year as Beijing boosts the economy to meet growth targets despite worries about the risks of prolonged debt-fuelled stimulus. Lending continued to be driven by consumer loans, primarily home mortgages, despite a series of measures rolled out by the authorities to cool surging home prices and avoid property bubbles.
Off-balance sheet lending also unexpectedly spiked in November, raising concerns of tighter liquidity if regulators crack down on the shadow banking sector, economist David Qu at ANZ said. New bank loans rose to a record 11.6 trillion yuan in the first 11 months of the year, according to Reuters calculations based on central bank data, and have handily surpassed the levels of China’s massive credit-led stimulus during the global financial crisis in 2009. But analysts said the increase in November was partly seasonal, as outstanding yuan loan growth held steady at 13.1 percent by month-end on an annual basis, unchanged from October.
Subdued corporate demand
Corporate loan growth remained weak in November, increasing by only 165.6 billion yuan. That pointed to subdued credit demand from companies and a preference by banks to lend to households, as mortgages are usually considered higher quality assets, said Nomura economist Yang Zhao. “With the property market cooling down, I would expect that loan growth faces downward pressure next year. I don’t think there is a fundamental improvement in investment demand by corporates,” said Yang.
Mid- to long-term loans to households rose to 569.2 billion yuan, or 71.2 percent of all loans, up from September’s 66.5 percent, though analysts said it might take a few months to know how tighter restrictions will impact mortgages. Analysts polled by Reuters had expected new lending to have risen to 720 billion yuan from October’s 651.3 billion yuan. Broad M2 money supply (M2) grew 11.4 percent from a year earlier, central bank data showed yesterday, slightly below forecasts. —Reuters