New Loans Hit New High in January

Chinese banks in January extended a total of 2.9 trillion yuan ($460.7 billion) in new loans, up 396.24% from the previous month, hitting a historic high.

Chinese banks’ record lending in January is partly driven by seasonal factors as banks tend to front-load their loans at the start of the year to maximize interest, said E Yongjian, senior analyst at the finance research center of the state-owned Bank of Communications.

New loans to companies in January totaled 1.78 trillion yuan, an increase of 631.91% from December, central bank data showed on Monday. New long-term loans taken out by households totaled 591 billion yuan, an increase of 89.91% from a month ago.

The larger-than-expected lending figure shows that demand for property purchases has not weakened, said Liu Dongliang, an analyst with China Merchants Bank. Medium- to long-term household lending, which are primarily made up of mortgage loans, surged from the previous month, while new short-term household lending totaled 310 billion yuan, a large percentage of which likely came from consumer loans, which eventually ended up in the property market, said Liu.

Caixin also learned from banking sources that the central bank has given “window guidance” to banks, telling them to keep the total scale of new yuan lending constant from Feb. 11 to Feb. 15, as regulators attempted to curb loan growth ahead of the weeklong Lunar New Year holiday.

China’s M2, a broad measurement of the money supply, grew 8.6% in January from a year ago to 172.08 trillion yuan, increasing 0.4% from a historic low in December, when the growth rate was 8.2%.

Contact reporters Leng Cheng (chengleng@caixin.com) and Liu Xiao (liuxiao@caixin.com)