China bank lend­ing heads for a record

Kuwait Times - - BUSINESS -

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

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