Domestic banks extend near-record loans in Jan; central bank signals tightening

Updated 2017-02-15 10:01:56 Global Times/Agencies

Domestic banks extended 2.03 trillion yuan (5.74 billion) in net new yuan-denominated loans in January, the second-highest monthly tally on record, even as the central bank sought to contain the risks from years of explosive growth in debt.

While less than analysts had expected, new lending last month was nearly double the 1.04 trillion yuan seen in December, indicating credit growth in China remains robust after last year's record pace.

New total social financing, a broader measure, totaled 3.74 trillion yuan in January, also up sharply from December and higher than the same period last year.

Outstanding yuan-denominated loans grew 12.6 percent year-on-year, the slowest growth rate since May 2005. Analysts polled by Reuters had expected a rise of 13.4 percent.

The People's Bank of China (PBC), the central bank, raised key short-term money rates in late January and early February, surprising markets and reinforcing a signal to borrowers that it is intent on reducing credit risks by moving to a tightening policy bias this year.

The rate increases followed media reports that the PBC had advised banks to slow or curtail lending amid speculation that loans in January had been unusually heavy.

Broad money supply (M2) in January grew 11.3 percent from a year earlier, central bank data showed on Tuesday, unchanged from the previous month.

But a breakdown of the overall financing numbers appeared to indicate a surge in less-regulated shadow banking activity, possibly in response to the central bank's tougher stance. New trust loans nearly doubled to 317.5 billion yuan as companies turned to alternative sources of financing.

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