China new loans seen at five-month high


Beijing: New bank loans in China are expected to have picked up to a five-month high in June, a Reuters survey has showed, as Beijing kept ample liquidity in the financial system to support the slowing economy and offset growing US trade pressure.

The central bank also stepped up cash injections last month to calm nerves after regulators seized a troubled regional bank, which sparked worries of financial contagion and briefly drove some short-term lending rates to record highs.

Chinese banks likely extended 1.7 trillion yuan ($246.92 billion) in net new yuan loans last month, up from 1.18 trillion in May but below 1.84 trillion in June 2018, according to a median estimate in a Reuters survey of 29 economists.

But some analysts are bracing for a weaker reading, after data from the China Banking and Insurance Regulatory Commission (CBIRC) last week suggested lenders doled out more than 990 billion in new loans last month. “We expect a modest rise in new loans due to seasonal factors,” said Tang Jianwei, a senior economist at Bank of Communications in Shanghai.

“But CBIRC’s H1 data suggested new loans in June might be slightly lower than May. We think this is due to weak loan demand from the real economy, as investment and consumption remain sluggish and exports still faces downward pressure.”

Banks might also have been more cautious about lending risks in the wake of the takeover of Baoshang Bank in May, Tang added.