Lending growth to slow as liquidity returns to China, says HKMA

After meetings with 20 banks, the Hong Kong Monetary Authority, which was concerned about the rapid loan growth in the first half of this year, now expects credit expansion to slow as bankers say fewer mainland companies may need urgent loans from them.

In June, loans grew at the highest rate since January 2011.

They were mainly to big companies, and many involved revolving credit and syndication facilities, a spokesman for the monetary authority said yesterday.

The monetary authority did not elaborate on what kind of "big firms" borrowed most heavily, but some senior bankers said mainland companies accounted for most of the rapid loan growth, especially in June.

Many companies had difficulty securing loans from lenders on the mainland because of tightening liquidity there.

The findings came from on-site checks and meetings with 20 banks that the monetary authority, worried about asset quality, conducted to ensure sufficient risk management was in place.