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LENDING & CREDIT | Cesar Tordesillas, China
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China's Big 4 accelerate new loans

The "big four" Chinese banks extended 70 billion yuan or $11 billion worth of yuan-denominated loans in the first half of August.

 

This is a significant increase from the 50 billion yuan offered last month.

The figures follow an unexpected fall in new loan releases in July, when China's various financial institutions extended 540.1 billion yuan in local currency new loans — against an estimate of 700 billion yuan by the industry — the lowest level since last October.

Deeply concerned about declining credit supply, ICBC, China Construction Bank, Bank of China Ltd and Agricultural Bank of China have accelerated their loan issuance in line with government wishes, said Richard Huang, a partner of Boston Consulting Group and an industry expert.

Wang Jun, an economist with China Center for International Economic Exchanges, a government think tank, added: "July's figure was unusually low. If that continues, China won't even achieve its annual credit supply target, which is why credit release has accelerated in August."

Another sign of State support is that despite the big banks' larger credit feed, the percentage of medium- and long-term loans has not risen significantly.

"That demonstrates the banks' lack of confidence in their borrowers. If they were more confident, they would issue more medium- and long-term loans," said Huang.

However, analysts said that a bigger concern for China's bankers and policymakers remains that the easing in liquidity still might not be enough to improve weak demand for loans from Chinese companies.

"The lackluster real economy has made it difficult for companies to find decent projects.

"So, there is no great need for them to seek lending," Wang said.

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