(Repeat to advise media clients pictures are available with
* Sept new loans 1.22 trln yuan, vs f'cast 1 trln yuan (Aug
* M2 money supply +11.5 pct y/y, vs f'cast +11.6 pct (Aug
* Total social financing at 1.72 trln yuan, vs 1.47 trln
yuan in Aug
BEIJING, Oct 18 Chinese banks extended 1.22
trillion yuan ($181 billion) in new loans in September, a
three-month high and well above expectations, while money supply
growth edged up, indicating the central bank is keeping policy
accommodative to support economic growth.
The central bank has pledged to keep policy slightly loose,
but recent data has suggested many Chinese companies are
hoarding cash rather than investing it, adding to views that
further central bank easing would not be as effective in
spurring the economy as in the past.
Analysts polled by Reuters had expected new lending to
increase modestly to 1 trillion yuan, after more than doubling
in August to 948.7 billion yuan.
Broad M2 money supply grew 11.5 percent in September from a
year earlier, the People's Bank of China (PBOC) said on Tuesday,
slightly below forecasts but up from August's 11.4 percent rise.
Outstanding yuan loans grew 13 percent by month-end on an
Outstanding loans had been forecast to rise 12.9 percent,
while money supply was seen up 11.6 percent.
New bank loans totalled 10.96 trillion yuan in the first
Strong lending has been driven by a sharp jump in local
government debt swaps, aimed at reducing their interest
payments, and by strong mortgage demand, highlighting the risks
to the banking system if a property boom pops.
In the first nine months household loans, which are mostly
home mortgage loans, accounted for 46 percent of total loans, up
from 39 percent in the first half of the year.
In recent weeks, a growing number of Chinese cities have
announced new restrictions on property purchases as the
government tries to cool soaring home prices.
"Although we expect economic growth to slow again in the
fourth quarter, the tightening measures taken by local
governments suggest that short-term policy is now focused on
reining-in the surge in home prices rather than boosting
growth," analysts at Nomura said in a note.
"Against this backdrop, room for the PBOC to further cut
interest rates or the RRR this year is limited. As such, we
remove our call for one more interest rate cut and one more RRR
cut through the rest of this year."
China's debt has soared to 250 percent of GDP and the Bank
for International Settlements (BIS) warned in a report published
in September that a banking crisis was looming in the next three
"Credit booms, even stealth mini ones, have a stair-step
effect on the credit-to-GDP ratio, which at 250 percent China
can ill afford," Tim Condon, ING's chief Asia economist, wrote
in a recent note.
But Condon believed the recent credit boom driven by lending
for government debt swaps had already peaked.
Total social financing (TSF), a broad measure of credit and
liquidity in the economy, rose to 1.72 trillion yuan in
September from 1.47 trillion yuan in August.
TSF includes off-balance sheet forms of financing that exist
outside the conventional bank lending system, such as initial
public offers, loans from trust companies and bond sales.
M1 money supply, which includes cash and short-term
deposits, rose 24.7 percent in September from a year earlier,
versus August's 25.3 percent rise.
A widening gap between M1 and M2 growth has fuelled concerns
about a "liquidity trap" in the economy where companies remain
wary of investing regardless of how much stimulus policymakers
pump into the system.
The gap narrowed to 13.2 percentage points in September from
13.9 percentage points in August.
(Reporting by Elias Glenn and Kevin Yao; Editing by Kim