Monday, February 24, 2020
Martin Hennecke

Bank loans increase as support grows
Chinese banks extended 1.21 trillion yuan (HK$1.33 trillion) in new loans in August, up from July and exceeding analysts' expectations, People's Bank of China (PBOC) data showed yesterday. Policymakers are building support for the slowing economy, and further policy easing is expected in coming weeks as the Sino-US trade dispute takes a bigger toll on the economy. Chinese regulators have been trying to boost bank lending and lower financing costs for more than a year, especially for smaller and private companies, which generate a strong share of the country's economic growth and jobs. But some analysts say credit demand has not picked up as much as expected, possibly because of weak domestic orders and the deepening trade war. That has reinforced views the government must roll out more stimulative measures to spur investment and stabilize economic activity. "August lending data is in line with market expectations," said Wen Bin, economist at Minsheng Bank in Beijing. "It shows increased support for the real economy. In the next step, monetary policy is expected to be preemptive and flexible. There is room for cutting interest rates and reserve requirements." Household loans, mostly mortgages, rose to 653.8 billion yuan in August from 511.2 billion yuan in July, while corporate loans climbed to 651.3 billion yuan from 297.4 billion yuan. Broad M2 money supply in August grew 8.2 percent from a year earlier, above estimates of 8.1 percent. It rose 8.1 percent in July. Outstanding yuan loans grew 12.4 percent from a year earlier - in line with expectations but slower than July's 12.6 percent. Some analysts say the annual comparison is a better way to assess trends in China's credit growth, rather than more volatile monthly readings.

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