BEIJING- New bank loans in China jumped by more than expected to an all-time high in January, as the central bank moved to shore up the sputtering economy, reinforcing expectations for more stimulus in the coming months.
Policymakers have pledged to roll out further measures to support the weaker-than-expected post-COVID recovery in the world’s second-largest economy, amid a deep property crisis and prolonged stock market rout.
Chinese lenders tend to front-load loans at the beginning of the year to get higher-quality customers and win market share.
Banks extended 4.92 trillion yuan ($683.7 billion) in new yuan loans in January, hitting a record high, up sharply from December and beating analysts’ expectations, data from the People’s Bank of China (PBOC) showed on Friday.
January lending more than quadrupled from December’s 1.17 trillion and exceeded the previous record of 4.9 trillion yuan in the same month a year earlier.
Analysts polled by Reuters had predicted new yuan loans would rise to 4.50 trillion yuan in January.
“January bank lending is stronger than expected, which will support the real economy,” said Luo Yunfeng, an economist at Huajin Securities.
“Going forward, monetary policy is likely to be loosened marginally,” Luo said.
Chinese banks doled out a record 22.75 trillion yuan in new loans last year, up 6.8 percent from 2022. But loan growth year-on-year fell to its lowest in more than 20 years in December as the weak economic outlook left consumers and companies in no mood to take on more debt.
China’s economy grew 5.2 percent in 2023, meeting the official target, but the recovery was far shakier than many analysts and investors expected, with a deepening property crisis, mounting deflationary risks and tepid demand casting a pall over the outlook for this year.
The central bank said on Thursday it would keep policy flexible and precise to spur domestic demand, while maintaining price stability, amid signs of a patchy economic recovery and persistent deflationary risks.
“In light of deepened deflation and downbeat sentiment, we continue to expect two more policy rate cuts and two more RRR cuts through the remainder of this year,” analysts at Goldman Sachs said in a note.
To prop up faltering growth, the PBOC cut the reserve requirement ratio (RRR) for banks by 50-basis points on Feb. 5, the biggest in two years, releasing 1 trillion yuan in long-term liquidity.
Household loans, mostly mortgages, climbed to 980.1 billion yuan in January from 222.1 billion yuan in December, while corporate loans jumped to 3.86 trillion yuan from 891.6 billion yuan. – Reuters
