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Chinese new bank lending misses the mark in December

Photo: Julia Vynokurova/ Getty.

Chinese new bank lending has disappointed to the downside in December, increasing by 597.8 billion yuan.

The figure was below expectations for an increase of 700 billion yuan, and short of the 697.3 billion yuan level of a year earlier.

Over the year outstanding loans increased by 14.3%, below the 14.9% rate of November and forecasts for a deceleration to 14.8%.

Broad money growth, or M2, also missed to the downside, expanding by 13.3% compared to estimates for growth of 13.5%. It was also 0.4% below the 13.7% clip seen in the 12 months to November.

Despite the deceleration in bank lending and M2, total social financing (TSF) – the broadest measure of liquidity that captures lending from non-traditional sources – soared to 1.82 trillion yuan from 1.02 trill yuan in November.

While a large increase, it’s not unusual.

In December 2014, TSF rose to 1.69 trillion yuan, an increase from 1.15 trillion yuan a month earlier.

The increase came as Chinese firms raised a record amount on the corporate bond market, along with a likely acceleration in shadow banking finance.

Zhu Qibing, a Beijing-based analyst at China Minzu Securities, told Bloomberg that “the jump in aggregate financing is due to the steady growth of off-balance-sheet lending and direct financing in the past few months”.

“Companies have the desire to borrow, but banks are still reluctant to lend,” he said.

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