China Construction Bank

Big Four mainland banks book 23.6pc drop in new loans in November

Mainland economic slowdown blamed for decline in the top banks' lending last month but analysts expect the full-year target to be met

PUBLISHED : Friday, 07 December, 2012, 12:00am
UPDATED : Monday, 30 May, 2016, 5:01pm

As the growth of loans on the mainland continues to decelerate, the Big Four banks' new lending fell 23.6 per cent last month from October.

However, analysts said mainland lenders would still meet the full-year target of 8 trillion yuan (HK$9.96 trillion) in new loans.

The top four lenders - Industrial and Commercial Bank of China, China Construction Bank, Bank of China and Agricultural Bank of China - extended 168 billion yuan in new loans last month, down from 220 billion yuan in October, the 21st Century Business Herald reported yesterday, citing data from the banks.

The report said the drop in new lending was due to the slowdown in the country's economic growth and banks' concerns about deteriorating asset quality.

Some commercial banks were concerned about their lending to certain industries, such as steel trading, and had tightened credit to them, the report cited an unnamed banker as saying.

New loans extended by the mainland's financial institutions would reach 420 billion yuan to 480 billion yuan given that the Big Four lenders accounted for 35 to 40 per cent of total bank lending, the report said.

Analysts expect total new lending last month and this month to reach 500 billion yuan per month.

In October, new lending dropped 13.9 per cent from a year ago to a 13-month low of 505.2 billion yuan, the People's Bank of China said.

Moody's Investors Service vice-president and senior analyst Hu Bin said policymakers were "comfortable" with the momentum of the economic recovery and were less likely to find it necessary to encourage banks to further boost their new loans to foster economic growth.

"Chinese banks' new loans for this year are likely to meet the government target of 8 trillion yuan despite a slowdown last month," Hu said.

Mainland financial institutions extended 7.2 trillion yuan in new loans in the first 10 months of this year.

Barclays said in a report last month that mainland banks were on track to reach a full-year new loan target of between 8 trillion yuan and 8.5 trillion yuan, as monetary conditions remained loose and medium to long-term financing picked up in October.

"Funding through bond issuance also saw a significant increase this year," Hu said.

He said more and more large enterprises were raising funds with direct financing tools rather than through banks, and that also weighed on the loan growth.