China Big Four Banks Deliver Sharp Jump in Lending 1st Half July - Report
07/18/2012| 11:27pm US/Eastern
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-- China's biggest four banks issued around CNY50 billion in new yuan loans in the first half of July, double that of the same period last month, Shanghai Securities News reports
-- Sharp increase in lending is further sign that Beijing has ramped up efforts to revive economic growth
-- Stronger lending comes also as banks start financing for government-led infrastructure projects
(Adds economist comments, recent China policy easing, latest economic data throughout.)
By Shen Hong
SHANGHAI--China's biggest four banks issued around CNY50 billion ($7.9 billion) in new yuan loans in the first half of July, double that of the same period last month, the state-run Shanghai Securities News reported Thursday, citing unnamed sources.
The sharp increase in lending, following surprisingly weak performance in the same period a month ago, is a further sign that Beijing has been ramping up its efforts to revive economic activity via easier access to credit.
In recent months, China has also been speeding up infrastructure project approvals, extending subsidies and offering tax breaks for smaller businesses. The central bank has also lowered interest rates twice this year--in early June and earlier this month.
The four banks--Industrial & Commercial Bank of China Ltd. (>> Industrial and Commercial Bank of China), China Construction Bank Corp. (>> China Construction Bank Corporation), Bank of China Ltd. (>> Bank of China Limited) and Agricultural Bank of China Ltd. (>> Agricultural Bank of China Ltd)--usually account for 30% of new yuan loans issued by China's whole banking system.
The jump in new yuan loans came partly as the four banks started to provide financing for some infrastructure projects aimed at spurring economic growth, the report said, without giving details.
"This is another signal that indicates policy easing is picking up speed," Nomura China chief economist Zhiwei Zhang wrote in a research note Thursday.
He said this reinforces their view that China's gross domestic product growth will rebound in the second half of the year, as it has likely bottomed out in the second quarter.
Mr. Zhang added that total new yuan loans in July could reach CNY1 trillion as the government's stimulus policies start to take effect in the real economy.
Despite a weak showing in the first two weeks of June, Chinese financial institutions extended a total of CNY919.8 billion in new yuan loans last month, up from CNY793.2 billion in May, apparently following more pressure from the authorities.
Meanwhile, China's broadest measure of money supply, M2, was 13.6% higher at the end of June compared with a year earlier, faster than the 13.2% rise through May and a median 13.5% forecast from economists.
Faced with a slowing economy and weaker corporate borrowing appetites, there are signs that Chinese leaders have again resorted to using government-led investment as a main weapon to stabilize growth, at the risk of creating long-term industrial overcapacity and inefficiencies.
China's GDP growth slowed to 7.6% in the second quarter from a year earlier, down from 8.1% growth in the first quarter.
The International Monetary Fund on Monday lowered its estimates for China's economic growth this year and next, and warned of the possibility of a hard landing in the medium term.
The IMF cut its forecast for this year's GDP growth in China to 8.0% from its previous forecast of 8.2% in April. It also lowered its estimate of next year's growth rate, to 8.5% from 8.8% previously.
Newspaper website: http://www.cnstock.com
--Amy Li contributed to this article.
Write to Shen Hong at hong.shen@dowjones.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
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