Chinese banks stem lending in April as debt worries rise

Banks extended $150.16b in net new yuan loans.

Reuters reports that Chinese banks held bank lending in April amidst fears of rising bad loans as net new yuan loans fell below analyst expectations after hitting $150.16b (CNY1.02t).

Also read: Chinese banks struggle to strike balance between curbing risk and lending

The growth of outstanding yuan loans also fell mildly to 13.5% in April from 13.7% in the previous month. Broad M2 money supply in April also slowed to 8.5%. 

Growth of outstanding total social financing (TSF), a broad measure of credit and liquidity in the economy, slowed to 10.4% from a year earlier from 10.7% in March. Total TSF in April fell much more than expected to $197/85b (CNY1.36t) from $416.07b (CNY2.86t) in March.

In December 2018, the volume of new loans extended by Chinese banks hit a record $2.4t amidst successive rounds of stimulus measures designed to make funding available for credit-starved SMEs that are bearing the brunt of the economic slowdown. The China Banking and Insurance Regulatory Commission (CBIRC) aims to have new loans to POEs account for over a third of total new corporate loans for large commercial banks and more than two-thirds for medium-sized and commercial banks.

However, such companies are from cyclical sectors like manufacturing, real estate, wholesale and retail which renders them more vulnerable to trade tensions and hampers their inability repay their debt.    

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