Chart of the Week: Chinese banks' loan growth slows to 13% in August

New loans have reached about $2.1b for the first eight months of 2020.

Chinese banks’ loan growth slowed to 13% in August from 13.2% in June, as some banks in major cities ran out of mortgage quota, reports Jefferies Equity Research.

In total, new loans in the sector reached almost $2.13b (RMB14.4t) in the first eight months of 2020.

Jefferies Equity Research analyst Shujin Chen and Alfred He expects loans for the remaining four months of the year to hit $694b (RMB4.7t) up to $827b (RMB5.6t), considering strong demand. This is consistent with the People’s Bank of China’s (PBOC) guidance that that H2 credit will be slightly higher than that recorded during the first half of the year.

“Strong loan demand can be seen in the rebound in bank acceptance bills (in TSF) after a regulatory clampdown on “discounted bill – structured deposit arbitrage” in June, strong personal loans in June-August, and strong long-term (LT) corporate loans in August thanks to a recovery in economic activity and the launch of government-supported infrastructure projects,” Chen and He noted.

For the full year, China’s total social financing (TSF) is expected to easily reach $4.5t (RMB31t) given $694m (RMB4.7t) of new lending on top of the $3.8t (RMB26.1t) in the first eight months of 2020.