China bank loans rise more than expected in November, credit growth eases

BEIJING (Reuters) - China’s new bank loans rose more than expected in November while broad credit growth eased, as the central bank maintained a accommodative stance amid the global pandemic.

A China yuan note is seen in this illustration photo May 31, 2017. REUTERS/Thomas White/Illustration

Chinese banks extended 1.43 trillion yuan ($218.96 billion) in new yuan loans in November, data from the People’s Bank of China (PBOC) showed on Wednesday.

Analysts polled by Reuters had predicted new yuan loans would rise to 1.40 trillion yuan in November, from 689.8 billion yuan in October.

Lending usually rebounds after October, when a week-long National Day holiday falls.

Analysts expect bank lending to slow in coming months as the PBOC shifts from a “wartime mode” to a “wait and see” approach, as the world’s second-largest economy recovers from the virus-induced slump earlier this year..

Julian Evans-Pritchard at Capital Economics said in a note that the economy had reached “a turning point in the credit cycle” and loan quotas were being tightened.

Rising corporate bond defaults could impel Chinese officials to step up their efforts to rein in risky borrowing and withdraw the implicit state guarantees that distort credit allocation, he added. Still, some analysts reckoned it was premature for the central bank to start tightening.

Banks doled out 18.38 trillion yuan in new loans in the first 11 months, on course to set a new annual record after extending 16.81 trillion yuan in 2019.

Beijing has been relying more on fiscal stimulus to weather the downturn, cutting taxes and allowing local governments to issue more bonds to fund infrastructure projects.

Broad M2 money supply in November grew 10.7% from a year earlier, quickening from a 10.5% rise in October and topping analysts’ forecast of 10.5%.

Outstanding yuan loans grew 12.8% from a year earlier, easing from a 12.9% rise in October. Analysts had expected 12.9% growth.

Annual growth of outstanding total social financing (TSF), a closely watched broad measure of credit and liquidity, eased to 13.6% in November from 13.7% in the preceding month.

TSF rose to 2.13 trillion yuan in November from 1.42 trillion yuan in October. Analysts had expected a rise of 2.075 trillion yuan.

Reporting by Lusha Zhang and Kevin Yao; editing by Larry King & Simon Cameron-Moore