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. 'Other state-owned lenders are under similar restrictions,' he said. State-owned banks, which get 90 per cent of their interest income from lending, should keep their new loan amounts at levels similar to this year's, the China Securities News quoted a source as saying yesterday. ICBC will be given a 365 billion yuan yearly quota for new loans, while China Construction Bank and Agricultural Bank of China should maintain new loans at 350 billion yuan and 310 billion yuan, respectively. Bank of China might have its new loan amount reduced to 260 billion yuan from 280 billion yuan this year, the report said. Mid-sized city commercial lenders are not being targeted in the latest round of credit tightening. 'We haven't heard of any notice from the central bank,' said a Bank of Beijing official. 'The 15 per cent loan growth target [for next year] should stay true.' But those city commercial lenders would still suffer from the lending cap, analysts said. 'State-owned lenders have the pricing power to maintain their interest margins,' said Zhang Xi, an analyst with China Galaxy Securities. 'In particular, ICBC shows the highest resilience to the tightened lending growth.' She estimated that the pre-tax earnings of mainland banks would drop 3 per cent to 27 per cent if loan growth were capped at 12 per cent. Foreign banks in China are also under increasing surveillance by the central government. The central bank will set a yearly quota for individual foreign banks starting next year. 'Different banks have different targets. Ours is well above 12 per cent,' said an official from a foreign bank which set up its mainland subsidiary this year.