Chinese central bank asked banks to moderate pace of lending in January: sources

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SHANGHAI / BEIJING (Reuters) – China’s central bank in January asked some commercial banks to moderate their lending pace, four sources directly familiar with the matter said on Friday as it seeks to manage the amount of credit entering the economy.

In its guidance, the People’s Bank of China (PBOC) also told lenders that the pace and size of loans granted should not fall below the level of the same period a year earlier.

Loan growth is generally strong in January, as Chinese banks tend to extend loans early in the year to gain market share.

At the same time, the PBOC has been providing ample liquidity to the market and for months urging banks to continue lending to cash-strapped businesses, especially small private businesses.

Analysts say reviving weak credit growth will be key to stabilizing the slowdown in the Chinese economy, but policymakers are watching closely to ensure loans are used for real business activity, not for profit. speculation.

“The (loan) injection was too big, and (we) need to put the brakes on,” one of the sources close to the central bank said.

Excessive loan growth is not compatible with effective demand for credit in the real economy, and excessive expansion of lending could lead to an influx of funds into unwanted areas, a second source said.

“(We) received the notice over the phone. Credit loans were indeed very strong, given that there are certain regulatory requirements, ”said a third source at a major bank who received the PBOC advice on the window.

The PBOC has yet to respond to Reuters’ request for comment.

A central bank official said earlier this month that China will maintain “appropriate” growth in total social finance, adding that the current level of liquidity in China’s banking system is reasonably sufficient.

In December, Chinese banks made many more new loans than expected, bringing last year’s tally to a record $ 2.4 trillion like Beijing.

However, declining sales and profits make some businesses reluctant to borrow. The OCBC estimates that new business loans in the fourth quarter were half the levels seen in the first nine months of the year.

Reporting by Li Zheng in SHANGHAI and Zhang Xiaochong and Ryan Woo in BEIJING, written by Winni Zhou; Editing by Kim Coghill

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