Data from China ICYMI late last week, once again showing that Chinese lenders tend to front-load loans at the beginning of the year.
Banks extended 4.92 trillion yuan in new yuan loans in January, a record high (the previous record was 4.9 trillion yuan in January 2023)
- more that 4 times the December figure of 1.17 trillion and exceeded the previous record of 4.9 trillion yuan in the same month a year earlier
- expected was 4.50 trillion yuan
Other data:
Household loans, mostly mortgages, were 980.1 billion yuan in January
- from 222.1 billion yuan in December
Corporate loans 3.86 trillion yuan
- from 891.6 billion yuan prior
Broad M2 money supply in January grew 8.7% y/y, the lowest since November 2021
Outstanding yuan loan growth 10.4% y/y, a more than 20-year low
- expected 10.4%, prior 10.6%
Outstanding total social financing (TSF), a broad measure of credit and liquidity in the economy, 9.5% y/y
- prior also 9.5%
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The background to this is that Chinese banks lent a record 22.75 trillion yuan in new loans in 2023, 6.8% from 2022
Y/y growth was the slowest in more than 20 years in December. The demand for loans is on the weaker side, not helped by real rates being so high (I posted on this last week), the weak economic outlook, a deep property crisis, mounting deflationary risks and lacklustre demand.
"In light of deepened deflation and downbeat sentiment, we continue to expect two more policy rate cuts and two more RRR cuts through the remainder of this year," analysts at Goldman Sachs said in a note.
