UPDATE 1-China Oct new bank loans fall sharply, above forecast

Reuters · 11/13/2023 10:42
UPDATE 1-China Oct bank loans fall sharply, above forecast

Adds details

Oct loans 738.4 bln yuan vs f'cast 665 bln yuan

M2 money supply +10.3% y/y, vs f'cast of +10.3%

TSF 1.85 trln yuan, vs f'cast 1.90 trln yuan

C.bank pledges to keep up policy support to spur growth

- New bank lending in China fell less than expected in October from the previous month, even after policymakers ramped up measures including cutting banks' reserve requirement ratios to get the shaky economy back on more solid footing.

Chinese banks extended 738.4 billion yuan ($101.30 billion) in yuan loans in October, down from 2.31 trillion yuan in September but exceeding analysts' expectations, according to data released by the People's Bank of China on Monday.

Analysts polled by Reuters had predicted yuan loans would dip to 665 billion yuan in October due largely to seasonal factors. The reading was higher than 615.2 billion yuan a year earlier.

Household loans, including mortgages, contracted by 34.6 billion yuan in October after rising 858.5 billion yuan in September. Corporate loans fell to 516.3 billion yuan from 1.68 trillion yuan in September.

Beijing has been ramping up measures to support the economy, including announcing a 1 trillion yuan ($137.43 billion) sovereign bond issuance and allowing local governments to frontload part of their 2024 bond quotas.

But a deep property crisis, local debt risks and policy divergences with the West are all complicating the recovery process, highlighted by persistent deflationary pressures.

The People's Bank of China (PBOC), which has delivered modest interest rate cuts and pumped out more cash into the economy in recent months, has pledged to keep up policy support.

In September, the PBOC cut banks' reserve requirement ratio for the second time this year to free up more funds to lend, and analysts expect another cut in the coming weeks.

Broad M2 money supply grew 10.3% from a year earlier, central bank data showed, in line with analyst forecasts in the Reuters poll. M2 grew 10.3% in September from a year ago.

Outstanding yuan loans grew 10.9% in October from a year earlier compared with 10.9% growth in September. Analysts had expected the pace of growth to remain steady.

Annual growth of outstanding total social financing (TSF), a broad measure of credit and liquidity in the economy, quickened to 9.3% in October from a year earlier and from 9.0% in September.

TSF includes off-balance sheet forms of financing that exist outside the conventional bank lending system, such as initial public offerings, loans from trust companies and bond sales.

In October, TSF fell to 1.85 trillion yuan from 4.12 trillion yuan in September. Analysts polled by Reuters had expected October TSF of 1.90 trillion yuan.

(Reporting by Judy Hua and Kevin Yao; editing by Miral Fahmy)

((judy.hua@thomsonreuters.com; 8610-6627 1297; Reuters Messaging: judy.hua.thomsonreuters.com@reuters.))