China Sept bank lending tops forecast, corporate loans jump

China’s new bank loans grew more than expected in September while broad credit growth also quickened as the economy continued to recover from its coronavirus-induced slump.

The country’s economic outlook has turned brighter with an aggressive government stimulus program and recent data points to further improvement after the COVID-19 health crisis.

Lenders issued 1.9 trillion yuan (US$282.3 billion) in new loans, up 48.4 percent from August and exceeding analysts’ expectations, according to data released by the People’s Bank of China yesterday.

That pushed bank lending in the first nine months of this year to 16.26 trillion yuan, beating a previous peak of 13.63 trillion yuan in the first three quarters of 2019.

Analysts had predicted new loans would rise to 1.7 trillion yuan from 1.28 trillion yuan the previous month but largely in line with a year earlier.

While the central bank stepped up policy support this year after widespread travel restrictions choked economic activity, it has more recently held off on further easing.

The world’s second-largest economy has steadily recovered from the pandemic, with imports growing at their fastest pace this year in September, while exports extended strong gains.

But analysts say policymakers face a tough job sustaining the stable expansion over the next few years.

PBOC Governor Yi Gang wrote in an article last week that China will maintain “normal” monetary policy for as long as possible, and promote a reasonable increase in household savings and incomes.

Broad M2 money supply in September grew 10.9 percent from a year earlier, topping estimates of 10.4 percent — the same pace as August.

Outstanding yuan loans grew 13 percent, unchanged from the gain in August. Analysts had expected 12.9 percent growth.

Household loans, mostly mortgages, rose to 960.7 billion yuan from 841.5 billion yuan in August, while corporate loans jumped to 945.8 billion yuan from 579.7 billion yuan.

Most China watchers prefer to focus on the annual growth figures, which are a better guide to underlying trends in credit creation given that net issuance figures are highly seasonal.

Annual growth of outstanding total social financing, a broad measure of credit and liquidity in the economy, quickened to 13.5 percent in September from 13.3 percent in the preceding month.