UPDATE 1 – China, new bank loans in June, overall lending growth exceeds expectations

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BEIJING, Jul 9 (Reuters) – New Chinese bank lending rose more-than-expected in June from the previous month, while overall lending growth also picked up substantially as the central bank seeks to support a slowdown in the world’s second-largest economy.

Chinese banks provided 2.12 trillion yuan ($ 327 billion) in new loans in June, up from 1.5 trillion yuan in the previous month, data from the People’s Bank of China showed on Friday.

Analysts polled by Reuters predicted that new yuan-denominated loans would rise to 1.8 trillion yuan in June.

China’s economy has largely recovered to pre-pandemic levels thanks to a remarkably robust export sector. However, smaller firms bear the brunt of the recent surge in commodity prices, as they find it difficult to pass the increased costs onto consumers.

To help smaller firms cope with rising spending, the NBK also announced on Friday a new cut in the amount of cash banks must keep as reserves, the first such move since last April, when the economy was still hit hard by the coronavirus crisis.

Household loans rose to 868.5 billion yuan in June from 623.2 billion yuan in May, while corporate loans rose to 1.46 trillion yuan from 805.7 billion yuan in May.

In June, total social finance (TSF), the overall measure of credit and liquidity in the economy, rose to 3.67 trillion yuan from 1.92 trillion yuan in May, well above analysts’ forecast of 2.87 trillion yuan.

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

Outstanding TSFs rose 11% to 301.56 trillion yuan ($ 46.49 trillion) at the end of June from a year earlier.

Broad money M2 grew by 8.6% year-on-year, which also exceeds Reuters’ projections by 8.2%. M2 rose 8.3% in May over last year.

Outstanding RMB loans rose 12.3% year over year, up from 12.2% growth in May. Analysts had expected an increase of 12.1%. ($ 1 = RMB 6.4855) (Reporting by Stella Qiu, Judy Hua and Kevin Yao, editing by Gareth Jones)



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