Loan growth limit cut to 12 per cent
China has once again tightened bank lending to cool an overheated economy and for the first time has widened its restrictions to include foreign banks, mainland banking officials said yesterday.
Beijing was limiting the loan growth of commercial banks to 12 per cent next year, down from the original guidance of 15 per cent, officials said. Banks also are expected to adhere to quarterly loan growth targets instead of annual ones.
The latest move, which highlights the country's concern that too much bank lending is fuelling rampant growth, also sets yearly quotas for new loans by foreign banks.
China banking stocks fell in Hong Kong yesterday. Industrial and Commercial Bank of China, the nation's biggest lender, lost 1.56 per cent to end at HK$5.68. China Construction Bank fell 3.17 per cent to HK$6.73, and Bank of China dipped 2.04 per cent to HK$3.85.
'Total new loans made next year have to stay at similar levels as this year, which means a decrease in loan growth,' said a loan credit officer from Bank of Communications.
He added that banks were also told to comply strictly with a 75 per cent loan-to-deposit ratio requirement, meaning banks must have a hundred yuan deposit before they can lend 75 yuan to customers.
