China Nov new bank loans jump to 1.21 trln yuan, below forecast

BEIJING (Reuters) - New bank lending in China rebounded less than expected in November from the previous month, as the central bank seeks to bolster slowing growth in the world's second-biggest economy.

Chinese banks extended 1.21 trillion yuan ($173.48 billion) in new yuan loans in November, nearly doubling October's 615.2 billion yuan but falling short of analysts' expectations, according to People's Bank of China (PBOC) data released on Monday.

Analysts polled by Reuters had predicted new yuan loans would jump to 1.35 trillion yuan in November.

In November last year, new loans were 1.27 trillion yuan.

"October new loans were weaker than expected due to the impact from COVID flare-ups," said Zhou Guannan, an analyst at Huachuang Securities.

Household loans, including mortgages, rose to 262.7 billion yuan in November, versus a contraction of 18 billion yuan in October. Corporate loans rose to 883.7 billion yuan from 462.2 billion yuan in October.

New loans totalled 19.91 trillion yuan in January-November, central bank data showed, compared with a record 19.95 trillion yuan in 2021.

The central bank will focus on supporting the slowing economy, PBOC Governor Yi Gang said earlier this month, adding that domestic consumer inflation is likely to stay moderate in 2023.

The central bank cut the reserve requirement ratio for banks by 25 basis points (bps) effective from Dec. 5, releasing about 500 billion yuan in long-term liquidity to prop up a faltering economy.

"COVID outbreaks and unstable expectations have created a continuous disturbance to credit extension," said Wen Bin, chief economist at China Minsheng Bank.

"We need to ramp up policy to consolidate the basis for economic stability and promote the steady expansion of bank lending and total social financing."

TARGETED SUPPORT

The PBOC is likely to ramp up targeted support for troubled sectors through its structural tools, policy sources and analysts have said.

In 2023, the government will focus on stabilising growth, employment and prices, while preventing and defusing major systemic risks, the Politburo, the country's top-decision making body, said last week.

China last week announced it was dropping key past of its anti-COVID regime. It has also moved to ease a funding crisis for property developers in a bid to stabilise the sector.

But economists say the road to recovery may be long and bumpy, especially if new infections surge and global demand continues to weaken.

China's economy grew just 3% in the first three quarters of this year and the full-year expansion is expected to be around 3%, well below the official target of around 5.5.

Broad M2 money supply grew 12.4% from a year earlier, central bank data showed, above estimates of 11.7% forecast in the Reuters poll. M2 grew 11.8% in October from a year ago.

Outstanding yuan loans grew 11.0% in November from a year earlier compared with 11.1% growth in October. Analysts had expected 11.1% growth.

Growth of outstanding total social financing (TSF), a broad measure of credit and liquidity in the economy, slowed to 10.0% in November from a year earlier and from 10.3% in October.

TSF includes off-balance sheet forms of financing that exist outside the conventional bank lending system, such as initial public offerings, loans from trust companies and bond sales.

In November, TSF rose 1.99 trillion yuan from 907.9 billion yuan in October. Analysts polled by Reuters had expected November TSF of 2.10 trillion yuan.

(Reporting by Judy Hua and Kevin Yao; Editing by Simon Cameron-Moore and David Evans)

By Judy Hua and Kevin Yao