BEIJING (Reuters) – China’s new bank lending hit an all-time high in the first quarter as the authorities kept policy accommodative and encouraged banks to lend more to businesses to support the economic recovery after the lifting of stringent COVID-19 curbs.
The world’s second-largest economy rebounded from pandemic disruptions driven by consumption and infrastructure. To spur credit growth, the central bank in March cut banks’ reserve requirement ratio (RRR) for the first time this year.
That, and the fact lenders tend to front-load lending early in the year, pushed bank loans in the first quarter to a record of 10.6 trillion yuan ($1.54 trillion), up 27% from the first quarter of 2022 – the previous record.
For March, banks extended 3.89 trillion yuan in new yuan loans, more than double February’s tally and surpassing analysts’ expectations, data from the People’s Bank of China showed on Tuesday.
Analysts polled by Reuters had predicted new yuan loans would rise to 3.24 trillion yuan last month, versus 1.81 trillion yuan in February. The new loans were higher than 3.13 trillion yuan a year earlier.
Beijing’s lifting of its zero-COVID policy in December and other measures have started to rekindle credit demand though there are fears the momentum could fade.
“Credit supply turns out to be much stronger than expected in March,” said Zhang Zhiwei, chief economist at Pinpoint Asset Management.
“The credit impulse in Q1 indicates that growth will likely rebound strongly in the coming quarters.”
Household loans, mostly mortgages, jumped to 1.24 trillion yuan in March from 208.1 billion yuan in February, while corporate loans rose to 2.7 trillion yuan last month from 1.61 trillion yuan in February.
Several small and mid-sized banks in China have lowered their deposit rates, a move that could help ease costs as loan growth faces more pressure amid rising economic risks.
Broad M2 money supply grew 12.7% in March from a year earlier, data showed, in line with estimates of 12.7% in the Reuters poll. M2 rose 12.9% in February.
Outstanding yuan loans grew 11.8% in March from a year earlier compared with 11.6% growth the previous month. Analysts had expected 11.7% growth.
Outstanding total social financing (TSF), a broad measure of credit and liquidity in the economy, grew 10% in March from a year earlier, quickening from 9.9% in February.
TSF includes off-balance sheet forms of financing that exist outside the conventional bank lending system, such as initial public offerings, loans from trust companies and bond sales.
In March, TSF rose to 5.38 trillion yuan from 3.16 trillion yuan in February. Analysts polled by Reuters had expected March TSF of 4.5 trillion yuan.
($1 = 6.8846 Chinese yuan)
(Reporting by Judy Hua and Kevin Yao; Editing by Jacqueline Wong)
