China’s new yuan loans in February expected to fall by a record low

  • New loans in February at 1.49 trln yuan compared to 3.98 trln yuan in January
  • Money supply growth in February at 9.5% year-on-year compared to 9.8% in January
  • New February TSF seen at 2.22 trillion yuan vs. 6.17 trillion yuan in January
  • Loans, money supply data due March 10-15

BEIJING, March 9 (Reuters) – The amount of new yuan lending from China is expected to fall in February from its record high in January due to seasonal factors, a Reuters poll has found, as the central bank maintains its accommodative policy 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. of the survey of 28 economists.

A pullback in loans in February was widely expected, as Chinese banks tend to preload loans at the start of the year to get better quality customers and gain market share.

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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 actual demand may remain weak amid the housing slowdown,” Citi analysts said in a note.

China is targeting slower economic growth of around 5.5% this year as a housing slowdown and lackluster consumption cloud the outlook for the world’s second-largest economy. Read more

To boost growth, the central bank cut interest rates and the reserve requirement ratio (RRR) for banks, with further easing measures expected. Read more

China has pledged to keep money supply and total social finance growth essentially in line with nominal economic growth this year.

Outstanding yuan loans are expected to rise 11.5 percent in February from a year earlier, similar to January, according to the survey. Broad M2 money supply growth in February slowed to 9.5% from 9.8% in January.

China has set the 2022 quota for issuing local government special bonds at 3.65 trillion yuan, unchanged from last year.

Any acceleration in government bond issuance could help boost total social finance (TSF), a large measure of credit and liquidity. TSF outstandings increased by 10.5% in January against 10.3% in December.

Citi expects exceptional TSF growth of 10.6% in February.

In February, the new TSF is expected to plunge to 2.22 trillion yuan from 6.17 trillion yuan in January.

($1 = 6.3177 Chinese yuan renminbi)

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Reporting by Judy Hua and Kevin Yao Editing by Tomasz Janowski

Our standards: The Thomson Reuters Trust Principles.

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