Chinese banks extended 1.08 trillion yuan in new loans in September, more than analysts expected and well above August. Outstanding loan growth still hit a record low, and one analysis argues weak demand from households and businesses is the underlying problem.
Chinese banks extended 1.08 trillion yuan ($161.37 billion) in new loans in September, rising sharply from August's 60 billion yuan. The figure beat the 975 billion yuan that analysts polled by Reuters had expected. Reuters calculated the numbers from People's Bank of China data, because the central bank does not provide monthly breakdowns.
Lending rebounds, but the yearly comparison stays weak
The rebound came as policymakers stepped up targeted monetary support. In late September, the government unveiled measures including targeted rate cuts and mortgage subsidies. Reuters notes that Chinese lenders typically accelerate credit issuance toward quarter-end to meet internal targets.
Even so, September lending trailed 1.29 trillion yuan a year earlier. Outstanding yuan loans rose 4.8% from a year earlier, a record low, down from 4.9% in August. New loans totalled 11.52 trillion yuan in the first nine months, compared with 14.75 trillion yuan in the same period last year.
Money supply growth slows
Broad M2 money supply expanded 7.2% in September from a year earlier, an 18-month low, against a forecast of 7.4%. Narrower M1 grew 3.2% year-on-year, compared with 4.1% in August. Total social financing rose 7.1% from a year earlier, down from 7.2% in August.
Investinglive sees weak demand, not bank willingness, as the issue
Fitch Ratings said the policy package should modestly improve credit transmission, but is unlikely to materially lift broader credit demand. Investinglive calculates that lending is down roughly 16% from September last year, and that the nine-month total is a 22% decline.
Its author argues the problem is that households and businesses are not eager to borrow, rather than banks being unwilling to lend. Investinglive adds that the PBOC has acknowledged slower loan growth could become the new normal.
Investors now look to third-quarter GDP data, which China is set to release on October 19.
Sources: Reuters via Investing.com, Investinglive
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