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China's new yuan loans hit 3-year high

Xinhua, February 9, 2013

• China's new yuan-denominated lending in January surged to a three-year high as a stronger economy boosted demand for bank credit, official data showed on Friday.

  New yuan loans soared to 1.07 trillion yuan (170.4 billion U.S. dollars) in January, up 334 billion yuan year on year, the People's Bank of China (PBOC) announced.

  The amount was the highest since January 2010, when new yuan loans hit 1.39 trillion yuan.

  The mild recovery of China's economy generated more demand for loans, said Lian Ping, chief economist at the Bank of Communications.

  China's economy ended a seven-quarter slowdown and accelerated to a 7.9-percent year-on-year growth in the fourth quarter of 2012.

  The launch of some projects was postponed to this year because of weak credit supply at the end of last year, also contributing to the sharp year-on-year increase, according to Lian.

  New middle- and long-term loans reached 309.8 billion yuan in January, much higher than the 81.8-billion-yuan level of December 2012, which was the lowest monthly amount since 2009, the PBOC said in an online statement.

  Besides, more ample deposits made it easier for banks to lend, Lian said.

  Bank deposits added 1.11 trillion yuan in January, compared with a decline of about 790 billion yuan in the same period of last year.

  Wang Tao, chief economist with UBS Securities, attributed the increase to soft credit demand a year earlier and the fact that last year's Spring Festival holiday came in January while this year's holiday falls in February, hence a lower base of comparison.

  Chinese banks tend to ramp up lending at the start of the year in order to reap interest income earlier.

  E Yongjian, a researcher at the Bank of Communications, predicted new loans would retreat in February because of the coming Spring Festival holiday.

  Annual new yuan lending is likely to stand at 9-9.5 trillion yuan this year, he said. That will be up from last year's 8.2 trillion yuan.

  New loans denominated in foreign currencies stood at 179.3 billion yuan in January, compared with a 14.8-billion-yuan decrease in foreign-currency loans in the same period of 2011, the central bank said.

  It added that the country's social financing, a measure of funds raised by entities in the real economy, amounted to 2.54 trillion yuan in January, up 1.56 trillion yuan from the same period last year.

  A significant part of the surge was driven by faster growth in means of financing other than bank loans, according to PBOC data.

  Social financing in China includes bank loans, trust loans, corporate bonds, entrusted loans, banker's acceptance bills and other means.

  Trust loans accounted for 8.2 percent of social financing in 2012, up 6.6 percentage points year on year. Corporate bonds accounted for 14.3 percent, up 3.7 percentage points.

  By the end of January, the broad measure of money supply (M2), which covers cash in circulation and all deposits, increased 15.9 percent year on year to 99.21 trillion yuan, the statement said.

  The increase was 2.1 percentage points higher than the annual growth rate in 2012 and 3.5 percentage points higher than that of the corresponding period last year.

  Meanwhile, the narrow measure of money supply (M1), which covers cash in circulation plus current corporate deposits, jumped 15.3 percent year on year to 31.13 trillion yuan.

  The outstanding amount of cash in circulation (M0) amounted to 6.25 trillion yuan in January, up 4.4 percent from one year earlier.

  Last month, the net amount of cash put into circulation stood at 779 billion yuan.  

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