China Oct bank lending ‘halves’

Weak demand cited

SHANGHAI, Nov 12, (AFP): China’s bank lending nearly halved in October compared with the month before, the central bank said Thursday, reflecting lack of demand despite an interest rate cut aimed at boosting the flagging economy, the world’s second-largest.

Chinese banks extended 513.6 billion yuan ($80.7 billion) in new loans in October, the People’s Bank of China said in a statement, down from 1.05 trillion yuan in September.

The sharp decline came despite the central bank cutting interest rates last month, the sixth such move since November last year.

“The decline in new loans was partly due to the week-long National Day holidays in the beginning of October,” ANZ Banking Group said in a research note.

But it added the fall reflected “lack of demand and commercial banks’ caution ... due to rising non-performing loans”.

Separately, total social financing — an alternative measure of credit in the real economy — was 476.7 billion yuan in October, down sharply from 1.30 trillion yuan in September and missing a median forecast of 1.05 trillion yuan in a survey of economists by Bloomberg News.

“The dive in social credit ... reflects that the real economy is feeble and efficient demand is lacking,” Liu Dongliang, a senior analyst at China Merchants Bank in Shenzhen, said in a research note.

Chinese growth hit a 24-year low in 2014 and has slowed further this year, raising concerns on global markets. The country logged its worst economic performance since the global financial crisis in the third quarter, with growth of just 6.9 percent.