China April new bank loans tumble as COVID jolts economy -Breaking
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© Reuters. FILE PHOTO – Face-masking people walk by a bank as the Chinese flag is flown at half-mast in Beijing. This was during China’s national mourning of those who have died from the coronavirus (COVID-19) on Qingming, an annual tomb-sweeping celebration.Judy Hua, Kevin Yao
BEIJING (Reuters] – New Chinese bank lending dropped in April compared to the month before, as China’s COVID-19 virus shook the economy.
Chinese banks issued 645.4 billion yuan (95.14 billion dollars) of new yuan loans to customers in April. That’s a decrease of around 80% from March. Analyst expectations were not met, according the People’s Bank of China data.
Reuters analysts polled predicted that the new yuan lending would drop to 1.52 Trillion Yuan by April. This is compared with 3.13 Trillion Yuan the month before and 1.47 Trillion Yuan a year prior.
Due to credit demand being impacted by lockdowns, lending last month was weaker than we expected. Capital Economics stated in a note that this should prompt the PBOC’s announcement of further easing measures.
“But the central banks continues to indicate a more restrained approach.”
According to the central the rapid slowdown of new loans in April was due to the effect of COVID upon the real economy.
It stated that micro-, small-, medium and large enterprises had greater operating problems and the demand for financing was lower.
Economically, the government has taken drastic measures to stop COVID spreading in many Chinese cities.
In order to offset a slowdown in economic growth the central bank has reduced the amount of cash reserves banks are required to hold starting April 25. It is expected that more gradual easing actions will be taken.
Monday was Monday for central banks. They announced that they would increase their support of the slowing economy.
The central bank data revealed that the broad M2 money supply grew 10.5% over a year ago, which is higher than the 9.9% estimate in the Reuters poll. From a year earlier, M2 increased 9.7% in March.
The outstanding yuan loan portfolio grew by 10.9% in April compared to 11.4% in March. Analysts expected an 11.4% increase.
The growth of outstanding total financial financing (TSF), which is a large measure of liquidity and credit in the economy, fell to 10.2% in April, down from 10.6% in March.
TSF covers off-balance sheet financing forms that aren’t available in the standard bank lending process, like initial public offerings and loans from trust corporations.
TSF declined to 910.2 trillion yuan by April from March’s 4.65 billion. Reuters analysts polled had predicted that April TSF would be 2.15 trillion yuan.
($1 = 6.7835 renminbi)
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