Credit continues to build up in the system despite deleveraging efforts.
Reuters reports that the volume of new loans extended by Chinese banks hit $179.51b (1.15t yuan) in May, according to central bank data.
Outstanding yuan loans slowed marginally from 12.7% in April to 12.6% in May.
Broad M2 money supply remained flat at 8.3% YoY, slightly behind analyst forecasts of an 8.5% expansion.
China’s banks extended a record $2.11t (13.53t yuan) in new loans in 2017, up 7% on a year-on-year basis, despite a government campaign to rein in risks in the financial system from a rapid build-up in debt.
“Despite the authorities’ deleveraging efforts, overall credit continues to build up within the financial system. As such, Fitch expects asset quality pressures to remain although reduced economic headwinds, if sustained, could lower pressure in the short-term,” said Grace Wu, head of China bank ratings at Fitch.
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