Chinese banks' new loans hit $211b in July

The central bank has been encouraging lenders to step up lending.

Reuters reports that the new loans extended by Chinese banks hit $211b (CNY1.45t) in July after the central bank encouraged lenders to step up lending amidst an economic slowdown brought about by the country's unrelenting campaign against financial sector risk. 

Outstanding yuan loans posted double-digit growth after rising from 12.7% in June to 13.2% in July, beating market expectations of 12.8% growth.

“New loans exceeded expectations due to policy support,” said E Yongjian, an analyst at Bank of Communications in Shanghai.

Also read: Chinese banks urged to accelerate lending as economy grinds to a halt

Household loans fell to $91.97b (CNY634.4b) whilst corporate loans hit $94.25b (CNY650.1b) in July. China’s total social financing (TSF), a broad measure of credit and liquidity in the economy, dropped to $8.85t (CNY1.04t) in July.

Broad M2 money supply also rose by 8.5% YoY in July which represents the highest point in five months. 

This comes as new credit as a percentage of GDP plunged to a near-three year low in June as Beijing’s campaign to clamp down on risk has dampened economic output, resulting in slower growth and factory activity.

Also read: Chinese banks brace as mroe reserve cuts loom to boost credit-short SMEs

The country's banking and insurance regulator earlier prodded financial institutions to "earnestly implement" plans to reduce financing costs for small firms whilst the central bank is reportedly planning to use its Medium-term Lending Facility (MLF) to encourage bank loans and investment in lower-rated corporate debt.

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