BEIJING (Reuters) – The amount of China’s new yuan loans is expected to fall in February from a record high in January due to seasonal factors, a Reuters poll showed, as the central bank keeps policy accommodative to support the slowing economy.
Chinese banks are estimated to have issued 1.49 trillion yuan ($235.85 billion) in net new yuan loans last month, down sharply from 3.98 trillion yuan in January, according to the median estimate in the survey of 28 economists.
A pull-back in February’s lending has been widely expected as Chinese banks tend to front-load loans at the beginning of the year to get higher-quality customers and win market share.
The expected new loans would still exceed 1.36 trillion yuan issued in February 2021.
“As a seasonally low month, February should still see robust credit supply, although the real demand may remain weak amid the property downturn,” analysts at Citi said in a note.
China is targeting slower economic growth of around 5.5% this year as a property downturn and lacklustre consumption cloud the outlook for the world’s second-largest economy.
To spur growth, the central bank has cut interest rates and banks’ reserve requirement ratio (RRR), with more easing steps expected.
China has pledged to keep money supply and total social financing growth basically in line with nominal economic growth this year.
Outstanding yuan loans were expected to grow by 11.5% in February from a year earlier, the same as in January, the poll showed. Broad M2 money supply growth in February was seen slowing to 9.5% from 9.8% in January.
China has set the 2022 quota for local government special bond issuance at 3.65 trillion yuan, unchanged from last year.
Any acceleration in government bond issuance could help boost total social financing (TSF), a broad measure of credit and liquidity. Outstanding TSF rose 10.5% in January, up from 10.3% in December.
Citi expects outstanding TSF growth of 10.6% in February.
In February, new TSF is expected to plunge to 2.22 trillion yuan from 6.17 trillion yuan in January.
($1 = 6.3177 Chinese yuan renminbi)
(Reporting by Judy Hua and Kevin Yao; Editing by Tomasz Janowski)
