BEIJING, Aug 14 (Reuters) – China’s new yuan loans contracted in July for the second time this year, falling short of forecasts as seasonal factors and weak household credit demand dragged on lending in the world’s second-largest economy.
Total new yuan loans shrank by 340 billion yuan ($50.43 billion) in July for the second contraction since April as the economy battles weak credit demand, Reuters calculations based on data released by the People’s Bank of China on Friday showed.
Analysts polled by Reuters had expected new yuan loans in July to reach 45 billion yuan, versus 1.61 trillion in June and a fall of 50 billion a year earlier.
The contraction followed a decline of 10 billion yuan in bank loans in April.
Chinese banks typically slow lending after front-loading credit ahead of the end of the June quarter.
The PBOC does not issue monthly breakdowns. Reuters calculated the July figure using the central bank’s data for January to July, compared with the January to June figure.
New loans totalled 10.38 trillion yuan for the first seven months of this year, the PBOC data showed, down from 12.87 trillion a year earlier.
Outstanding yuan loans grew by 5.1% in July from a year earlier, down from 5.2% in June at a record low and missing the market consensus of 5.3%.
Signs of a sustained recovery in credit growth remain scant as households continue deleveraging and private-sector borrowing demand stays subdued.
Official data showed China’s factory activity as well as services and construction activities all contracted in July.
Household loans, including mortgages, shrank by 460.3 billion yuan last month after a rise of 264.6 billion in June, while corporate loans fell by 130 billion after a rise of 1.5 trillion, according to Reuters’ calculations.
China’s top leaders pledged last month to bolster growth by accelerating fiscal spending on already approved infrastructure projects through year-end, rather than by planning major new stimulus measures.
On Wednesday, the PBOC said it would maintain an appropriately loose monetary stance and roll out practical, effective measures as needed, but gave few details and stopped short of signalling explicit cuts to policy rates or banks’ reserve-requirement ratio.
Broad M2 money supply grew 7.7% in July from a year earlier, PBOC data showed, below analysts’ forecast of 7.9%, and down from 8% in June.
Outstanding total social financing – a broad measure of credit and liquidity – rose by 7.4% in July from a year earlier, but was unchanged from June. Any acceleration in government bond issuance could boost such financing.
(Reporting by Kevin Yao and Shi Bu; Editing by Sam Holmes and Clarence Fernandez)
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