China: New bank loans increase in March, but overall credit growth slows
March new loans 2.73 trln yuan compared to forecast 2.45 trln yuan
New loans in first quarter at record high – Reuters calculations
March M2 money supply + 9.4% y / y, vs forecast of + 9.6%
Exceptional TSF + 12.3% Y / Y, vs 13.3% in February
March TSF 3.34 trln yuan, vs forecast 3.70 trln yuan
Add quotes from analysts
BEIJING, April 12 (Reuters) – New bank lending to China rose more than expected in March compared to the previous month on strong demand for corporate and household financing, as the central bank walks a tightrope between supporting the rapid recovery of the economy and control of debt risks.
Chinese banks granted 2.73 trillion yuan ($ 416.62 billion) in new yuan loans in March, down from 1.36 trillion yuan in February and exceeding analysts’ expectations of 2.45 billion yuan, according to data released Monday by the People’s Bank of China (PBOC).
This pushed first-quarter bank lending to an all-time high of 7.67 trillion yuan, according to Reuters calculations based on central bank data. It broke the previous high of 7.1 trillion yuan in the first quarter of 2020, when policymakers began rolling out unprecedented measures to deal with the shock of the coronavirus crisis.
The surge in lending has raised concerns among authorities, with financial regulators asking banks to cut their lending books this year to guard against risks emerging from bubbles in domestic financial markets, sources told Reuters last month. .
Despite the surge in March, growth in outstanding yuan loans fell to 12.6% from the previous year, from 12.9% in February. Analysts had expected growth of 12.6%.
âPersonally, I think social finance is a more important indicator … which is at a relatively low level (for March). If it continues to decline, the credit crunch looks pretty obvious, âsaid Hao Zhou, senior economist at Commerzbank.
Growth in the stock of total social finance (TAF), a general measure of credit and liquidity in the economy, slowed to 12.3% in March from a year earlier and to 13.3% in February.
TSF includes forms of off-balance sheet financing that exist outside the conventional bank lending system, such as initial public offerings, trust company loans, and bond sales.
In March, TSF also missed expectations, as it rose to 3.34 trillion yuan from 1.71 trillion yuan in February. Analysts polled by Reuters had expected a March TSF of 3.70 trillion yuan.
Credit trends in China are being watched closely by investors who are increasingly worried about tightening policies as Beijing seeks to exit emergency measures now that the world’s second largest economy is quickly regaining momentum. The country’s premier stock index .CSI300 fell more than 5% in March, its worst monthly performance in a year.
Data from last week showed inflationary pressures were mounting, with the factory price gauge rising the most in nearly three years.
The central bank pledged to stabilize the country’s overall debt level, which jumped last year due to stimulus measures, but said it would avoid a sudden policy change and continue to support small companies in difficulty.
Policymakers are particularly concerned about the financial risks associated with the country’s overheating real estate market and have called on banks and local authorities to prevent business loans from flowing into real estate.
Last year, the central bank rolled out a series of measures, including cuts in interest rates and reserve ratios to support the economy. But he kept the benchmark lending rate, the prime lending rate, unchanged since May.
“We believe credit growth will slow further for the rest of the year,” Capital Economics analysts said, citing factors such as the PBOC directive to control lending for the rest of the year and lowering of local government bond quotas.
“There is usually a delay of about six months before changes in credit growth appear throughout the economy: the slowdown in credit will be a growing drag in the second half of the year.”
The M2 money supply in March increased by 9.4% a year earlier, also below estimates of 9.6% predicted in the Reuters poll. It rose 10.1% in February.
($ 1 = 6.5528 yuan Chinese renminbi)
GRAPHIC – China’s Economic Trends http://tmsnrt.rs/2iO9Q6a
(Reporting by Judy Hua and Kevin Yao; Writing by Stella Qiu; Editing by Ana Nicolaci da Costa and Raissa Kasolowsky)
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