China new loans rebound on govt support

BEIJING: China’s new bank loans rebounded in September after dipping in the two previous months, as policymakers rolled out measures to ensure sufficient liquidity in the financial system amid worries a trade war with the United States could hurt the economy.

The People’s Bank of China (PBoC) has cut reserve requirements for lenders four times this year, with the latest cut taking effect on Oct 15, injecting more liquidity to stimulate bank lending.

But the central bank still faces obstacles in funnelling more credit to cash-strapped small businesses, which are vital for boosting economic growth and creating jobs.

Chinese banks extended 1.38 trillion yuan (US$199.25bil) in net new yuan loans in September, more than analysts had expected and up from the previous month.

Analysts polled by Reuters had predicted new yuan loans of 1.35 trillion yuan, up from 1.28 trillion yuan in August.

In September, household loans, mostly mortgages, rose to 754.4 billion yuan from 701.2 billion yuan in August.

Household loans accounted for 54.7% of total new loans in September, versus 54.8% in the preceding month, according to Reuters’ calculations based on central bank data.

Corporate loans rose to 677.2 billion yuan in September from 612.7 billion yuan a month earlier.

Total new bank loans in the first nine months of the year jumped 17.7% from a year earlier to 13.14 trillion yuan, and were on track to make a record year, eclipsing last year’s 13.53 trillion yuan.

Broad M2 money supply grew 8.3% in September from a year earlier, meeting analysts expectations and just slightly higher than the 8.2% posted in August, central bank data showed. Outstanding yuan loans grew 13.2% from a year earlier, matching expectations and August’s rise.

A recent run of key indicators showed a weakening in activity, with moderating industrial profits and record-low asset investment growth adding to the stress in the economy.

In a recent note, analysts at ANZ said they are expecting loan growth and total social financing to stay elevated in the coming months.

But rising defaults continue to keep lending appetite of banks at bay. Smaller companies, in particular, are still having a tough time securing loans and are grappling with rising borrowing and operating costs.