China's Big Four banks lend 53pc more in March on investment boom
Jump highlights liquidity available to fuel urbanisation push while exacerbating fears of those worried about property market bubble
New loans doled out by the mainland's Big Four banks surged 53 per cent last month compared to February, underscoring the ample liquidity available to meet the demand of the nation's investment boom.
The four largest lenders extended a total of 331 billion yuan (HK$414 billion) in new loans last month, compared to 216 billion yuan in February and 370 billion yuan in January, the official China Securities Journal reported yesterday, citing unnamed sources.
The aggregate lending of the Big Four - Industrial and Commercial Bank of China, China Construction Bank (CCB), Agricultural Bank of China and Bank of China - usually accounts for 30 to 50 per cent of new bank lending in China.
Economists expect new loans to total one trillion yuan when the People's Bank of China releases national credit figures in the middle of this month.
Lu Ting, an economist at Bank of America Merrill Lynch said: "Bank lending seemed to accelerate from the middle of March, helped by rising deposits and, perhaps, reduced intervention by the central bank after the release of weaker-than-expected growth data in the first two months."
Policymakers have said they will take a "neutral" monetary policy stance this year to balance inflation and an uneven economic recovery.
Industrial output in the first two months of this year expanded 9.9 per cent from a year earlier, below expectations.
Meanwhile, fixed-asset investment growth accelerated to 21.2 per cent year on year, with investment in the property sector rising 22.8 per cent as developers rushed to benefit from the market rebound.
CCB president Zhang Jianguo said last week that lending demand has been very robust so far this year, thanks to demand from homebuyers and infrastructure construction projects.
Peng Wensheng, chief economist at China International Capital Corp, said: "Personal loans should have increased substantially on the back of strong property sales, while stable growth in infrastructure investment suggests stable bank lending to the non-financial sector."
In post-result meetings last week, many banks said they would capitalise on China's urbanisation drive to expand business.
China's newly installed leaders have attached great importance to urbanisation, calling it the main driver of economic growth over the next few decades. Some fear the push will worsen the property market bubble and local governments' overinvestment in infrastructure.
Lu said other financing activities such as trust loans and corporate bond issuance were also likely to have expanded in March compared with February.