Yuan loans reach new record
CHINA’S banks extended a record 2.9 trillion yuan (R5.51trln) in new yuan loans in January, blowing past expectations and nearly five times the previous month as policy makers aim to sustain solid economic growth while reining in debt risks.
Net new loans surpassed the previous record of 2.51trln yuan in January 2016, which is likely to support growth not only in China, but underpin liquidity globally as major Western central banks begin to withdraw stimulus.
Chinese banks tend to frontload loans early in the year to get higher-quality customers and win market share, but the lofty January figure was even higher than the most bullish forecast by economists.
Analysts polled had predicted new loans of 2trln yuan, up sharply from December’s 584.4 billion yuan.
Beijing is in the second year of a regulatory push to contain financial risks and clamp down on riskier types of financing that have been fuelled by a rapid build-up in debt.
Avoid blow
But authorities are proceeding cautiously to avoid any sharp blow to economic growth or excessive financial market volatility.
Broad M2 money supply also beat expectations, growing 8.6 percent in January from a year earlier, central bank data showed yesterday. Economists had expected the growth rate to edge up to 8.4 percent from 8.2 percent in December.
After the December data was released, People’s Bank of China spokesperson Ruan Jianhong said the weak M2 growth was caused by a crackdown on banks’ off-balance sheet activities and that lower M2 growth may become a new normal.
Outstanding yuan loans grew 13.2 percent from a year earlier, also faster than an expected 12.5 percent rise and compared with an increase of 12.7 percent in December.
Last year China’s total new loans hit a record 13.53trln yuan, 7 percent more than the previous record in 2016.
The credit boom has been fuelled by strong economic growth, a robust property market and a crackdown on riskier shadow lending, which has forced banks to shift such loans back onto their balance sheets.