New Lending by Four Biggest Banks Hits New Low

飞雪寒冰

China's big four state-owned commercial banks extended about 110 billion yuan in new loans in September, the lowest monthly figure this year, banking sources told Caijing on Oct. 12.

Analysts said the big four's new lending for the month declined from 165.8 billion yuan in August primarily because the banks have finally heeded repeated calls from the regulator to refrain from accelerating lending at the end of the month, as well as a dramatic decline in new loans by Bank of China (SSE.601988; HKEX.0988).            


The Beijing-based bank, which had led the big four in terms of new loans since February, only disbursed about 3 billion yuan, down sharply from 72.2 billion yuan in August.

September lending fell as the bank had achieved the goals of expanding its loan portfolio, adjusting lending structure and boosting market share, said the analysts, who declined to be identified ahead of the official release of statistics by the People's Bank of China.

New lending extended by the four biggest banks roughly accounts for half of the total by China's commercial banks.

China Construction Bank (SSE. 601939; HKEX.0939) extended 44 billion yuan worth of new loans in the month, up from the 34.7 billion yuan dealt out in August, bringing the total for the first nine months to 842.7 billion yuan.

飞雪寒冰

Industrial and Commercial Bank of China (SSE.601398; HKEX.0398), the world's largest commercial bank by market value, extended over 30 billion yuan in new loans in September, compared with the 38.1 billion yuan in August. ICBC has set a full-year lending target of 1 trillion yuan, and extended a total of 925.2 billion yuan in the first nine months.

Agricultural Bank of China also lent more than 30 billion yuan in the month, up from 20.8 billion yuan in August. The bank has not set a full-year loan target but said it will determine its lending scale in response to demand and economic conditions. New loans for the first nine months stood at 872.6 billion yuan.

Chinese banks tend to rush lending towards the end of a month or quarter in order to boost performance and expand market share. They lent a record 1.8 trillion yuan at the end of the first quarter, followed by 1.53 trillion at the end of the first half, Caijing reported earlier.

飞雪寒冰

The lending surges, which far exceeded the actual demand for credit, led to the China Banking Regulatory Commission issuing a series of warnings to the banks, the result of which was a decline in new loans in September, the analysts said.

Market operations conducted by the central bank to adjust liquidity, coupled with an investigation into banks' implementation of macro-economic policies by the National Audit Office that began in September, also put pressure on banks to slow new loan approvals, according to the analysts.  

New lending is expected to slow steadily in the fourth quarter, they added.