UPDATE 1 – China’s new bank loans in August rise to 1.28 trln yuan, higher than expected

(Adds details)

* August new loans 1.28 trln yuan against f’cast 1.22 trln yuan

* August M2 money supply + 10.4% y / y, compared to + 10.7%

* August TSF growth accelerates to 13.3% from 12.9% in July

BEIJING, Sep 11 (Reuters) – Chinese banks issued more new loans in August than the previous month, as broad credit growth accelerated, indicating continued political support to help the economy recover from a crash-induced slump. coronavirus.

Banks extended 1.28 trillion yuan ($ 187.25 billion) in new yuan loans, up from July and slightly above analysts’ expectations, according to data released Friday by the People’s Bank of China (PBOC).

Analysts interviewed by Reuters had predicted that new yuan lending would rise to 1.22 trillion yuan in August as the economy continued to recover, up from 992.7 billion yuan the previous month, but broadly in line with 1 , 21 trillion yuan the previous year.

Loans to households, mostly mortgages, increased to 841.5 billion yuan from 757.8 billion yuan in July, while business loans jumped to 579.7 billion yuan from 264.5 billion yuan. .

Authorities have urged banks to offer cheaper loans and cut fees to help struggling companies hit by the COVID-19 pandemic, although that support is weighing on lenders’ margins. The country’s five largest banks reported falling their largest profits in at least a decade last month due to rising bad loans.

Data from August so far suggests China’s economic recovery continues to grow after a record slump in the first quarter fueled by coronavirus outbreaks and blockades.

Exports have been growing at the fastest pace in over a year, while ex-factory prices have been falling at a slower pace thanks to higher industrial demand. Consumer demand, which has lagged behind, also appears to be turning the corner with auto sales on the rise for the fifth consecutive month.

With activity picking up, markets believe the central bank has shifted from emergency stimulus mode to waiting to see if previous measures, such as significantly higher infrastructure spending, will gain ground. Some analysts now believe there will be no more cuts in key interest rates this year.

The broad supply of M2 money in August grew 10.4% from the previous year, central bank data showed Friday, below the 10.7% forecast by the Reuters poll, which was the same pace of July.

Outstanding yuan-denominated loans grew 13.0% over the previous year, unchanged from 13.0% growth in July. Analysts also expected growth of 13.0%.

Most Chinese observers prefer to focus on annual growth data, which is a better guide for underlying trends in credit creation, as net issuance data is highly seasonal.

The annual growth in outstanding total social financing (TSF), a large measure of credit and liquidity in the economy, increased to 13.3% in August from 12.9% the previous month.

TSF is expected to be underpinned by a strong acceleration in local government bond issuance as they have been asked to complete the special bond issuance by the end of October.

Local government net debt issuance was 920.8 billion yuan in August, finance ministry figures showed, a sharp jump from 42.2 billion yuan the previous month.

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

In August, TSF jumped to 3.58 trillion yuan from 1.69 trillion yuan in July. Analysts interviewed by Reuters had expected an August TSF of 2.73 trillion yuan.

Reportage by Lusha Zhang and Kevin Yao; Editing by SImon Cameron-Moore


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