UPDATE 2-China October, Bank Lending Dips More Than Expected, But Credit Growth Accelerates
* Oct new loans 689.8 billion yuan vs f’cast 800 billion yuan
* Total new loans from January to October exceed 2019 record
* Oct M2 money supply + 10.5% y / y, vs f’cast of + 10.9%
* The exceptional growth of the TSF in October accelerated to 13.7% against 13.5% in September (adds an analyst comment)
BEIJING, Nov.11 (Reuters) – China’s new bank loans fell more than expected in October to their lowest level in a year, but the decline was likely seasonal and policymakers should maintain strong support for the economy as the global pandemic rages on.
Authorities stepped up support for small businesses after a record coronavirus-induced recession earlier this year. But as the Chinese economy recovers rapidly, the surge in infections in Europe and the United States is clouding the international outlook.
Lenders issued 689.8 billion yuan ($ 104.22 billion) in new yuan loans last month, data from the People’s Bank of China (PBOC) showed on Wednesday, up from 1.9 trillion yuan in September. and well below analysts’ expectations for 800 billion yuan.
Bank lending in China tends to slow down at the end of the year as lenders have used up most of their annual quotas.
Still, banks distributed a total of 16.95 trillion yuan in new loans in the first 10 months, surpassing an annual record of 16.81 trillion yuan in 2019. PBOC Governor Yi Gang said that new loans for 2020 as a whole are expected to hit an all-time high. -record time of nearly 20 trillion yuan.
The annual growth in total social finance outstanding (TSF), a broad measure of credit and liquidity, accelerated to 13.7% in October from 13.5% the previous month – a tailwind of stimulus policy which, according to analysts, could support the economic recovery in the months to come.
“We believe credit growth will remain strong in the near term,” said Julian Evans-Pritchard of Capital Economics in a note.
“Certainly bank lending has started to slow down, which we believe will continue in the coming months as credit quotas are now tightened. But appetite for bond and stock issuance among private companies is increasing as confidence in the outlook has returned. “
Loans to households, mainly mortgages, fell to 433.1 billion yuan from 960.7 billion yuan in September, while loans to businesses plunged to 233.5 billion yuan from 945.8 billion yuan. yuan.
Improving economic data and recent comments from PBOC officials have sparked speculation the central bank is ready to start cutting emergency stimulus measures. But analysts say he won’t rush to exit existing measures as long as uncertainties about the pandemic and global demand persist.
NO QUICK POLICY REVERSAL
The broad M2 money supply in October rose 10.5% year-on-year, after estimating that it would hold at 10.9%.
Outstanding yuan loans rose 12.9% year-on-year, after rising 13.0% in September. Most Chinese watchers prefer to focus on annual growth numbers, which are a better guide to underlying trends than highly seasonal monthly readings.
The TSF fell to 1.42 trillion yuan from 3.48 trillion yuan in September. Analysts had expected 1.4 trillion yuan.
Local governments have nearly exhausted their annual emission allowances as part of a campaign to boost investment in infrastructure and construction activities.
Chinese policymakers are set to set an average annual economic growth target of around 5% for the next five years, at the lower end of previously considered ranges due to global risks, political sources said.
$ 1 = 6.6189 yuan Chinese renminbi Report by Lusha Zhang and Kevin Yao; Editing by Kim Coghill