China’s new bank loans, credit growth in Feb weaker than expected, loan growth hit record low
DATA MACRO POLICY & REGULATION TOP
China’s new bank loans, credit growth in Feb weaker than expected, loan growth hit record low
DATA MACRO POLICY & REGULATION TOP

China’s new bank loans, credit growth in Feb weaker than expected, loan growth hit record low

 

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China’s new bank loans and overall credit growth came weaker than expected in February after a strong start in January, the seasonal factors caused by the Spring Festival holiday and sluggish borrowing demand.

Chinese banks extended 1.45 trillion yuan of new yuan loans in February, showed calculations based on data released by the People’s Bank of China (PBOC) on Friday, sharply lower than the 4.92 trillion yuan in January, compared to 1.81 trillion yuan a year earlier and falling short of 1.5 trillion yuan expected by analysts in a Reuters’ survey.

Bank loans for the household sector in February fell by 590.7 billion yuan from a year earlier, with short-term loans falling by 486.8 billion yuan, while medium- and long-term loans falling by 103.8 billion yuan, showed the data.

New bank loans to the corporate sector reached 1.57 trillion yuan in February and in particular, medium- and long-term loans reached 1.29 trillion yuan, 180 billion yuan higher than a year earlier, according to the data.

The lower new bank loans last month was mainly due to the Spring Festival holiday and fewer working days in the month, analysts say. The Spring Festival holiday fell in February this year, compared to late January in 2023.

The weak bank loans to the household sector was mainly due to sluggish new home sales at the start of 2024, dampening the household sector’s medium- and long-term borrowing needs, said Wen Bin, chief economist at China Minsheng Bank. Sales of China’s 100 top property developers reached 420.9 billion yuan in January – February, sliding 48.8% from a year ago, and in February alone, sales slumped 60% to 185.9 billion yuan, according to data from real estate research firm CRIC.

During the first two months of the year, Chinese banks extended a total of 6.37 trillion yuan in new yuan loans, according to PBOC data. 

Broad M2 money supply grew 8.7% in February from a year earlier, compared to expected 8.8% in the Reuters poll and in line with the growth in January. 

Outstanding yuan loans grew 10.1% in February from a year earlier, slowing from the 10.4% growth in January.

China’s total social financing, a broad measure of liquidity and credit in the economy, increased by 8.06 trillion yuan in the first two months, marking the second-highest on record for the same period, but 1.6 trillion yuan lower than a year earlier, showed the data.

Total social finanicng 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.

Outstanding total social financing stood at 385.7 trillion yuan at the end of February, growing by 9% from a year earlier, showed the data. 

Chinese companies’ net bond financing reached 164.2 billion yuan in February, falling by 190.5 billion yuan from a year earlier, while the government’s net bond financing reached 601.1 billion yuan, decreasing by 212.7 billion yuan, showed the data.