BEIJING (Reuters) – New bank lending in China fell more than expected in May from the previous month but broader credit growth quickened as the central bank continues to ease policy to get the economy back on solid footing after the shock from the coronavirus crisis.
Banks extended 1.48 trillion yuan ($209.47 billion) in new yuan loans in May, down from 1.70 trillion yuan in April and falling short of analyst expectations, according to data released by the People’s Bank of China (PBOC) on Wednesday.
Analysts polled by Reuters had predicted new yuan loans would fall to 1.50 trillion yuan in May from 1.70 trillion yuan the previous month. But new loans were higher than 1.18 trillion yuan in the same month last year.
Household loans, mostly mortgages, rose to 704.3 billion yuan in May from 666.9 billion yuan in April, while corporate loans fell to 845.9 billion yuan from 956.3 billion yuan.
Broad M2 money supply in May grew 11.1% from a year earlier, below estimates of 11.3% forecast in the Reuters poll. It rose 11.1% in April.
Outstanding yuan loans grew 13.2% from a year earlier compared with 13.1% growth in April. Analysts had expected 13.2%.
Pan Gongsheng, vice governor of the PBOC, said last week that the economic hit from the coronavirus pandemic was bigger than first expected and that more monetary and credit policy support was needed.
The PBOC has already rolled out a raft of easing steps since early February, including cuts in reserve requirements and lending rates and targeted lending support for virus-hit firms.
Reflecting the uncertain outlook, China set no annual growth target this year for the first time since 2002 and pledged more government spending to fire the world’s second-biggest economy back up. But expectations of a global recession are compounding the challenges.
Premier Li Keqiang told parliament last month that monetary policy would be more flexible, and growth of M2 – a broad gauge of money supply – and total social financing would be significantly higher this year.
Growth of outstanding total social financing (TSF), a broad measure of credit and liquidity in the economy, quickened to 12.5% in May from a year earlier and from 12% in April.
TSF includes off-balance sheet forms of financing that exist outside the conventional bank lending system, such as initial public offerings, loans from trust companies and bond sales.
In May, TSF rose to 3.19 trillion yuan from 3.09 trillion yuan in April. Analysts polled by Reuters had expected 3.00 trillion yuan.
(Reporting by Judy Hua and Kevin Yao; Editing by Kim Coghill)