Chinese banks lent more than expected in May while total social financing rose slower, the People's Bank of China said yesterday.
New yuan loans totaled 985.5 billion yuan ($150 billion) in May, up sharply from a six-month low of 555.6 billion yuan in April, the central bank said in a statement. The lending also exceeded market expectations for 750 billion yuan according to a Reuters poll.
However, total social financing (TSF) — the broadest measure of credit supply that includes loans, bank acceptance bills, corporate bonds and equity financing — added 659.9 billion yuan in May, down from 751 billion yuan in April.
This was due to a 506.6 billion yuan net fall in bank acceptance bills after several cases of embezzlement and fraud dragged total social financing lower than new yuan loans.
M2, the broad measure of money supply, rose 11.8 percent from a year earlier, compared with April's 12.8 percent.
"Though the loan growth is stronger than expectations, the TSF is much subdued. This suggests that a substantial reduction in alternative financing activities," the Australia and New Zealand Banking Group said in a note.
"In this regard, we think the weaker TSF highlights the potential poor economic prospects, consistent with the fall in the fixed-asset investment data in May."
On Tuesday, the National Bureau of Statistics said China's fixed-asset investment rose 3.9 percent in the January-May period, 1.3 percentage points slower than the January-April period.
The bureau attributed the slower growth to a decline in industrial and private investment.
ANZ economists said the higher-than-expected loans in May indicated the PBOC will remain moderately accommodative in its monetary stance but it will not push for a massive growth in loans.
