China new bank loans rise far less than expected in May By Reuters

BEIJING (Reuters) – New bank lending in China rebounded far less than expected in May and some key money gauges hit record lows, suggesting the world’s second-largest economy is still struggling to regain its footing even as the central bank seeks to bolster confidence.

Chinese banks issued 950 billion yuan ($130.93 billion) in new yuan loans last month, compared to 730 billion yuan in April, according to Reuters calculations based on the latest data from the People’s Bank of China (PBOC) released on Friday.

Analysts polled by Reuters had predicted loans would rise to 1.255 trillion yuan but would still be below the 1.36 trillion yuan issued in May last year.

The PBOC does not provide monthly breakdowns but Reuters calculated the May figures based on the bank’s Jan-May data compared with the Jan-April figure.

New loans totalled 11.14 trillion yuan for the first five months of the year, the PBOC said, compared with 10.19 trillion yuan in the first four months.

The PBOC has pledged to step up support for the economy and promote a rebound in prices – as deflationary pressures persist – but it has also cautioned against the risk of too much cash sloshing around the banking system as credit demand weakens.

Reuters reported last month that the PBOC has guided some banks to boost lending, even as banks face growing profitability pressures.

China has set an economic growth target of around 5% for 2024, but weak demand and a protracted property downturn is weighing heavily on activity, prompting expectations for cuts in interest rates and banks’ reserves requirements.

In May, China unveiled a raft of measures to revive its property market, including a 300 billion yuan relending facility to fund state firms’ purchases of completed unsold apartments for affordable housing. But analysts say it could take years for the sector – once a major economic growth driver – to recover.

Broad M2 money supply last month grew 7.0% from a year earlier – the lowest on record and below a Reuters poll estimate of 7.2% growth. It rose 7.2% in April.

M1 money supply growth also fell the most on record, shrinking 4.2% on-year.

Outstanding yuan loans rose 9.3% from a year earlier compared with April’s 9.6% rise. Analysts had expected 9.5% growth.

Annual growth of outstanding total social financing (TSF), a broad measure of credit and liquidity in the economy, picked up slightly to 8.4% in May from a record low of 8.3% in April.

TSF last month showed a rise of 2.07 trillion yuan, following a rare contraction of 72 billion yuan in April. Analysts polled by Reuters had expected May TSF of 2.2 trillion yuan.

($1 = 7.2558 renminbi)