China’s Aug new bank loans jump more than expected

BEIJING  – New bank lending in China beat expectations by nearly quadrupling in August from July’s level, as the central bank sought to shore up economic growth amid soft demand at home and abroad.

Chinese banks extended 1.36 trillion yuan ($186.18 billion) in new yuan loans in August, up from 345.9 billion yuan in July, according to People’s Bank of China data released on Monday.

Analysts polled by Reuters had predicted new yuan loans would rise to 1.20 trillion yuan in August. The new loans were higher than 1.25 trillion yuan in August last year.

“Credit growth improved modestly in August, as the policy measures helped the economy to stabilize,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management.

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“Mortgage loans rebounded which indicates the rate cuts and policy easing in the property sector helped to boost buyers’ sentiment.”

Household loans, including mortgages, rose to 392.2 billion yuan in August, versus a contraction of 200.7 billion yuan in July. Corporate loans rose to 948.8 billion yuan from 237.8 billion yuan in July.

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Premier Li Qiang said earlier this month that China is expected to achieve its 2023 growth target of around 5 percent, but some analysts believe the target could be missed due to a worsening property slump, weak consumer spending and tumbling credit growth.

To support the economy, the government has rolled out a series of policy measures in recent months, including steps to spur housing demand.

Central bank officials have pledged to use policy tools such as reserve requirement ratio (RRR) cuts to ensure reasonably ample liquidity.

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Broad M2 money supply grew 10.6 percent from a year earlier, central bank data showed, below estimates of 10.7 percent forecast in the Reuters poll. M2 grew 10.7 percent in July from a year ago.

Outstanding yuan loans grew 11.1 percent in August from a year earlier, which was in line with expectations and matched growth in July.

Annual growth of outstanding total social financing (TSF), a broad measure of credit and liquidity in the economy, quickened to 9 percent in August from a year earlier and from 8.9 percent in July.

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 August, TSF rose to 3.12 trillion yuan from 528.2 billion yuan in July. Analysts polled by Reuters had expected August TSF of 2.46 trillion yuan.