BEIJING, Sept 13 (Askume) – China’s new bank credit grew less than expected in August and fell to a 15-year low in July, while the central bank kept policy loose and stepped up efforts to boost a sluggish economic recovery.
Data released by the People’s Bank of China on Friday showed Chinese banks added 900 billion yuan ($126.86 billion) in yuan loans in August, a 246% increase from July but less than analysts expected.
Analysts polled by Askume had expected new yuan loans to reach 1.02 trillion yuan last month, down from 260 billion yuan in the previous month but still lower than the 1.36 trillion yuan in the same period last year.
“Both broad credit and bank credit growth slowed in August and were weaker than expected,” Leah Fahey of Capital Economics said in a note.
“While strong government spending will boost the economy in the coming months, any increase in private credit demand is unlikely to help.”
The People’s Bank of China (PBOC) did not provide monthly details, but Askume calculated the August figures based on the bank’s January-August data and previously released January-July data.
The People’s Bank of China said new RMB lending in the first eight months of this year totaled 14.43 trillion yuan.
Askume calculated based on data from the People’s Bank of China that household loans, including mortgage loans, rose by 190 billion yuan in August after a fall of 210 billion yuan in July, while corporate loans rose to 840 billion yuan from 130 billion yuan in July.
A senior central bank official on Friday pledged to maintain supportive policies and tight monetary conditions to spur economic recovery.
Analysts expect the People’s Bank of China, which has cut interest rates steadily throughout the year and increased liquidity, to ease policy further to support economic growth.
The policy is expected to be further relaxed
A central bank official said last week that the central bank has scope to reduce the reserve requirement ratio (RRR) , the amount of cash banks have to keep as reserves.
UBS analysts expect the People’s Bank of China to cut key policy rates by 10 basis points and the deposit reserve ratio by 25 basis points over the remainder of 2024.
President Xi Jinping on Thursday urged officials to work toward achieving the country’s annual economic and social development goals, as he is expected to take further steps to boost a sluggish economic recovery, state media reported.
Slowing economic activity in China has caused global brokerage firms to cut their forecasts for China’s 2024 growth rate, which is below the government’s official target of 5%.
Central bank data showed the broad M2 money supply grew by 6.3% year-on-year, higher than the 6.2% forecast in a Askume survey. M2 grew by 6.3% year-on-year in July.
RMB loan balances grew 8.5% year-on-year in August, compared with 8.7% in July. Analysts had expected growth of 8.6%.
Annual growth in total social financing (TSF), a broad measure of credit and liquidity in an economy, slowed to 8.1% in August from 8.2% in July.
Social financing instruments include off-balance sheet financing forms outside the traditional bank lending system, such as initial public offerings, trust company loans, and bond sales.
In August, the scale of social financing rose to 3.03 trillion yuan from 770 billion yuan in July. Analysts polled by Askume had expected social financing to reach 2.95 trillion yuan in August.
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