Pulling in deposits continued to be a struggle for mainland banks in the first two months of the year, according to bankers and analysts. Lenders, especially the smaller ones, have found it difficult to attract and retain deposits since last year as clients shift money into alternative investments such as wealth management and trust company products that offer much higher returns. The president of China Merchants Bank, Ma Weihua, speaking at the Boao Forum, said that mainland lenders continued to face challenges in attracting deposits. Liu Ligang, an economist at ANZ Bank, said: 'Deposit growth in the first two months slowed down compared with the same period last year.' Deposits picked up slightly last month, however, as the central bank relaxed liquidity controls, Liu said. Mainland banks' new loans, ANZ calculates, fell by about 126 billion yuan in the first two months compared with the same period last year. Total new loans issued in these two months reached 1.45 trillion yuan, the bank says. Michael Werner, a senior analyst at Sanford C. Bernstein, said deposits increased 12.7 per cent last year, a strong figure compared with most other countries but the weakest since China began economic reforms in the late 1970s. Despite the slow deposit growth, however, mainland bank loans rose 15.6 per cent, pushing up banks' loan-to-deposit ratio to 67.7 per cent in December, up 100 basis points year on year and the highest level since 2005, Werner said. Stanley Li, an analyst at Mirae Asset Securities, said the smaller, joint-stock banks such as China Citic Bank, China Merchants Bank, and Minsheng Bank, could be in bigger trouble than the larger ones. Industrial and Commercial Bank of China, for example, said at its annual results briefing last week that it saw robust deposit growth in the first two months. The country's M2, a broad measure of money supply, grew 12.4 per cent last year, the smallest rise in a decade, as a result of the fall in new deposits, analysts said. If deposits continue to grow slowly this year, it will constrain banks' ability to increase lending, since many small and medium-sized banks' loan-to-deposit ratios are already close to the 75 per cent ceiling set by the banking regulator to limit risks. China Merchants Bank's Ma said the bank was 'very cautious' about extending property financing, and it had the lowest proportion of property lending of any mainland bank. The bank's loans to the property sector fell 2.2 percentage points to 26.6 per cent of loans outstanding at the end of last year.