China April new loans rise to 1.18t yuan

[BEIJING] Chinese banks extended 1.18 trillion yuan (S$248.7 billion) in net new yuan loans in April, up slightly from March and higher than expectations, as policymakers look to support the economy as it faces fresh risks from US trade threats.

Analysts polled by Reuters had seen new yuan loans of 1.1 trillion yuan, down slightly from March's 1.12 trillion yuan.

Banks extended 6.04 trillion yuan in the first four months of the year, up 13.5 per cent from the same period last year.

China's banks extended a record 13.53 trillion yuan in new loans last year, 7 per cent more than the previous record in 2016, as authorities sought to support domestic activity even as they clamped down on riskier lending practices in the financial sector.

The latest data showed corporate and personal demand for credit remained relatively solid in April, auguring well for continued resilience in the world's second-largest economy.

Corporate loans rose to 572.6 billion yuan in April from 565.3 billion yuan a month earlier.

Household loans, mostly mortgages, fell to 528.4 billion yuan in April from 580 billion yuan in March, according to the central bank's data.

Household loans accounted for 44.8 per cent of total new loans in April, versus 52 per cent in March.

Chinese banks' loan books have also grown as regulators force them to bring so-called "non standard" assets onto their balance sheets to improve transparency. Those assets are often riskier products linked to shadow banking.

Broad M2 money supply grew 8.3 per cent in April from a year earlier, central bank data showed on Friday, missing forecasts for an expansion of 8.5 per cent and compared with 8.2 per cent in March.

Outstanding yuan loans grew 12.7 per cent from a year earlier, in line with expected 12.7 per cent rise and compared with a rise of 12.8 per cent in March.

China is in the third year of a regulatory push to reduce risks in the financial system that have been fueled by a rapid build-up in debt, which the Bank for International Settlements has warned could lead to a banking crisis.

But some analysts believe any fresh measures to bring down debt levels may be on hold for now, as policymakers wait to see if a simmering trade dispute with the United States inflicts further pressure on the economy.

Despite a stronger-than-expected 6.8 per cent expansion in the first quarter, analysts still expect China's economic growth to slow to around 6.5 per cent this year, even without any trade shocks. The government's "de-risking" campaign is slowly pushing up borrowing costs, which are expected to drag on demand and investment.

Those growth worries intensified in April as the US and China threatened to slap each other with tit-for-tat tariffs on each other's goods.

Softer March industrial and investment data added to the concerns.

Hours after those numbers were released on April 17, China's central bank unexpectedly cut reserve requirement ratios (RRR) for most banks, saying the move would free up funds for lending to smaller firms and did not constitute a policy shift from a neutral stance to broad monetary easing.

REUTERS