Yuan loans down, recovery still on track

Fresh lending dips from the same time last year but is up on October, keeping the banks on track to reach the country's annual goal

PUBLISHED : Wednesday, 12 December, 2012, 12:00am
UPDATED : Wednesday, 12 December, 2012, 3:37am

The amount of yuan-denominated new loans from mainland lenders was lower than expected in November, but analysts said the central bank's accommodative monetary policy remained unchanged and would keep the country's economy on track for recovery.

Fresh loans last month came to 522.9 billion yuan (HK$644.1 billion), down 7.1 per cent, or 40 billion yuan, from a year earlier.

But the figure was 3.5 per cent more than October's 505.2 billion yuan, the People's Bank of China (PBOC) said yesterday. Total bank lending was lower than the 550 billion yuan median estimate of 30 economists surveyed by Bloomberg.

New lending reached 7.75 trillion yuan in the first 11 months of this year, an increase of 13.5 per cent, or 919 billion yuan, from the year-earlier period. Outstanding yuan deposits at the end of November totalled 90.16 trillion yuan, up 13.4 per cent from a year earlier.

Monetary policy remained positive and the new lending for this year was on course to meet government targets of 8 trillion yuan, ANZ senior economist Raymond Yeung said. "New lending has become less important in the social financing, with other financing tools, such as corporate bonds, to bolster economic growth," Yeung said.

The Australia and New Zealand Banking Group forecast China's economy to grow in the fourth quarter at 8 per cent, after a 7.4 per cent increase in the third quarter. Yeung said he expected annual growth to accelerate to 8.1 per cent for 2013.

Total social financing, a broader measure of funding that includes bank loans, reached 1.14 trillion yuan in November, a 19.2 per cent, or 183.7 billion yuan, increase from 2011, although the figure was down from October's 1.29 trillion yuan, the PBOC said. Corporate bond financing, which amounted to 181.7 billion yuan in November, accounted for about 16 per cent of total social financing, while new yuan loans made up about 46 per cent, down from more than 58 per cent last year.

China's M2 measure of money supply - the broadest measure of money supply - reached 94.48 trillion yuan at the end of November, an increase of 14 per cent from a year earlier, the PBOC said.

Ma Jun, Deutsche Bank's greater China chief economist, expects new loans this month to reach 500 billion yuan to 600 billion yuan, bringing the total for this year to 8.3 trillion yuan to 8.4 trillion yuan, exceeding the official target. Total new lending last year was 7.47 trillion yuan.

The central bank might set next year's new lending target at 8 trillion yuan, a report by China Securities Journal said yesterday, citing an unnamed banker.

Ma is more optimistic about next year's loan growth, expecting a 13 per cent to 14 per cent increase in new lending over 2012. "The central bank will maintain a 'stable' monetary policy. It doesn't even need to cut interest rates [to boost lending] as the economy is picking up," he said. Deutsche Bank expected inflation to reach 4 per cent by next year's end, increasing chances of rate rises not cuts, he added.

Zhang Zhiwei, from Nomura, said total social financing would stay strong at 1.2 trillion yuan this month.