New bank lending in China rose more than expected in May, and broader credit growth also accelerated as policymakers sought to pull the second-largest economy out of the sharp recession caused by the coronavirus.
Chinese banks have issued new loans in yuan worth 1.89 trillion. yuan ($ 282.62 billion) in May, nearly tripling April and easily exceeding expectations, according to central bank data.
Analysts expected yuan loans to rise to 1.3 trillion. yuan in May from 645.4 billion yuan in April and compared to 1.5 trillion yuan. yuan a year ago.
“Credit growth was stronger than expected last month and is likely to accelerate further following a clear message in late May that policymakers want banks to step up lending,” said Capital Economics.
“More policy easing is possible. But private sector credit demand is likely to remain sluggish and with current fiscal plans, local government lending is set to slow. A dramatic increase in credit expansion still looks unlikely,” he added.
New household loans, including mortgages, rose to 288.8 billion yuan in May, down from 217 billion yuan in April, while new corporate loans rose to 1.53 trillion yuan. yuan in May from 578.4 billion yuan in April.
However, 38% of new monthly loans were in the form of short-term account financing, which fell from 80% in April but is still higher than 10% in the first quarter, indicating that real demand for credit remains weak.
Source: Capital
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