BEIJING (Reuters) - Chinese banks made fewer new loans in August than expected, highlighting problems facing the central bank as it tries to boost credit to smaller companies facing weaker demand at home and shrinking export orders.
With U.S. trade duties threatening to ratchet up pressure on China’s already slowing economy, its policymakers have shifted focus in recent months to growth-boosting measures, pushing banks to lend more and reducing corporate financing costs.
Chinese banks extended 1.28 trillion yuan ($186.40 billion) in net new yuan loans in August, according to central bank data released on Wednesday.
Analysts polled by Reuters had predicted an August tally of 1.3 trillion yuan, down from July’s 1.45 trillion yuan but nearly 20 percent more than the same month last year.
Corporate lending fell from July, while household loans picked up sharply, suggesting banks are taking on more exposure to relatively safer consumer loans as corporate credit quality deteriorates along with the slowing economy.
Corporate loans fell to 612.7 billion yuan in August from 650.1 billion yuan a month earlier.
Household loans, mostly mortgages, rose to 701.2 billion yuan in August from 634.4 billion yuan in July. Household loans also accounted for 54.8 percent of total new loans in August, versus 43.8 percent in the preceding month.
Total new bank loans in the first eight months of the year jumped nearly 19 percent from a year earlier to 11.76 trillion yuan. That is well on track to set a new full-year record, eclipsing last year’s 13.53 trillion yuan.
Broad M2 money supply grew 8.2 percent in August from a year earlier, central bank data showed on Wednesday. Analysts had expected M2 to rise 8.5 percent, matching July’s pace.
Outstanding yuan loans grew 13.2 percent from a year earlier, matching expectations and in line with July’s rise.
To head off a sharper slowdown in the economy and weather the blow from expanding U.S. tariffs, China is ramping up infrastructure spending and pumping ample liquidity into the financial system to guide borrowing rates lower.
The central bank also is trying to encourage banks to continue lending to struggling small and mid-sized private firms, which traditionally have a tougher time accessing affordable funding than their larger, state-owned peers.
But China’s commercial banks are increasingly cautious. Non-performing loans jumped sharply at smaller banks in the second quarter and corporate bond defaults are on the rise, even as Beijing tries to maintain a broader clampdown on riskier lending and prevent another rapid build-up in debt.
At least 13 lenders, including 10 rural commercial banks, have had their credit ratings cut or outlooks downgraded to negative since the start of 2017, according to a Reuters analysis in July.
Reporting by Kevin Yao and Cheng Fang; Editing by Kim Coghill