China’s loans slumped in February due to coronavirus, Lunar New Year

Chinese banks extended 905.7 billion yuan (US$130 billion) in new yuan loans in February, down from a record 3.34 trillion yuan (US$480 billion) in January

Banks saw a net decline of 413.3 billion yuan (US$59 billion) in household loans in February compared with a rise of 634.1 billion yuan in January

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Published: 7:00pm, 11 Mar 2020Updated: 7:00pm, 11 Mar 2020

New bank lending in China fell more than expected in February from a record in January, but the drop was likely due to seasonal factors as policymakers stepped up support for the economy jolted by a coronavirus outbreak.

Chinese banks extended 905.7 billion yuan (US$130 billion) in new yuan loans in February, down from a record 3.34 trillion yuan (US$480 billion) in January and missing analyst expectations, according to data released by the People’s Bank of China (PBOC) on Wednesday.

Analysts polled by Reuters had predicted new yuan loans would fall to 1.10 trillion yuan (US$158 billion) in February. The new loans were still higher than 885.8 billion yuan (US$127 billion) a year earlier.

A pullback in lending in February was widely expected as Chinese banks tend to front-load loans at the beginning of the year to get higher-quality customers and win market share.

A drop in borrowing by consumers due to fewer property and car sales was offset by a pickup in loans to companies, in large part thanks to official measures such as the PBOC’s special coronavirus relending facility

Julian Evans-Pritchard

But the sharper-than-expected fall in new loans, especially household loans, likely reflects the impact of the coronavirus outbreak which saw many banks and companies shut for most of February due to strict antivirus measures while the property market also ground to a halt.

Banks saw a net decline of 413.3 billion yuan (US$59 billion) in household loans in February compared with a rise of 634.1 billion yuan in January, while corporate loans dropped to 1.13 trillion yuan (US$163 billion) from 2.86 trillion yuan.