China Feb new bank loans dip to 1.45 trln yuan, Reuters calculations show

By Thomson Reuters Mar 15, 2024 | 4:59 AM

BEIJING (Reuters) – New bank lending in China fell more than expected in February from a record high the previous month, even as the central bank seeks to spur sluggish economic growth and fight deflationary pressures.

Chinese banks extended 1.45 trillion yuan ($201.5 billion) in new yuan loans in February, according to Reuters calculations based on data released by the People’s Bank of China, down sharply from January and falling short of analysts’ expectations.

A pull-back in February from January was widely expected, because Chinese banks tend to front-load loans at the beginning of the year to get high-quality customers and win market share.

The timing of the week-long Lunar New Year holiday, which fell in February this year versus late January in 2023, may also have weighed on lending activity last month.

Analysts polled by Reuters had predicted new yuan loans would fall to 1.50 trillion yuan in February from 4.92 trillion yuan the previous month and against 1.81 trillion yuan a year earlier.

Chinese banks made 6.37 trillion yuan in new yuan loans in the first two months of 2024, data released by the central bank showed on Friday.

The central bank did not give loan figures for February alone.

China has set an economic growth target for 2024 of around 5%, which many analysts say will be a challenge to achieve without much more stimulus.

PBOC Governor Pan Gongsheng told a news conference last week that there is still room for cutting banks’ reserve ratio requirement (RRR), following a 50-basis point cut in January, which was the biggest in two years.

Last month, the PBOC announced its biggest ever reduction in a key mortgage reference rate, in a bid to prop up the struggling property market and overall economy.

Broad M2 money supply grew 8.7% from a year earlier, below estimates of 8.8% forecast in the Reuters poll. M2 grew 8.7% in January from a year ago.

Outstanding yuan loans grew 10.1% in February from a year earlier compared with 10.4% growth in January. Analysts had expected 10.2% growth.

Growth of outstanding total social financing (TSF), a broad measure of credit and liquidity in the economy, slowed to 9.0% in February from a year earlier and from 9.5% in January.

TSF includes off-balance sheet forms of financing that exist outside the conventional bank lending system, such as initial public offerings, loans from trust companies and bond sales.

In February, TSF fell to 1.56 trillion yuan from 6.5 trillion yuan in January. Analysts polled by Reuters had expected February TSF of 2.22 trillion yuan.

(Reporting by Judy Hua and Kevin Yao; Editing by Kim Coghill)