Key facts
- New bank lending in China rose to 1.08 trillion yuan ($161.37 billion) in September.
- September new yuan loans surpassed analysts' expectations of 975 billion yuan.
- Outstanding yuan loans grew 4.8% year-on-year in September, a record low.
- Broad M2 money supply expanded 7.2% year-on-year in September, an 18-month low.
- Total social financing rose 7.1% year-on-year in September.
China's new bank lending rebounded sharply in September, exceeding expectations as policymakers increased targeted monetary support for the economy. Chinese banks extended 1.08 trillion yuan ($161.37 billion) in new loans, a significant increase from August's 60 billion yuan and surpassing the 975 billion yuan forecast by analysts polled by Reuters. The central bank data indicated a pickup in credit issuance, suggesting Beijing's stimulus efforts may be gaining traction. Despite the rise in new loans, overall credit growth remains a concern. Outstanding yuan loans increased by 4.8% year-on-year, a record low and down from 4.9% in August. For the first nine months of the year, new loans totaled 11.52 trillion yuan, down from 14.75 trillion yuan in the same period last year. The government unveiled measures in late September, including targeted rate cuts and mortgage subsidies, to spur growth. Fitch Ratings commented that while these policies should modestly improve credit transmission, they are unlikely to materially lift broader credit demand or significantly alter the property sector's weak trajectory. Policymakers aim to meet an annual GDP growth target of 4.5% to 5%, after growth slowed to a 3-1/2-year low in the second quarter. Broader monetary indicators also showed signs of slowing momentum. Broad M2 money supply expanded 7.2% year-on-year in September, an 18-month low and below the forecasted 7.4%. The narrower M1 money supply grew 3.2% year-on-year, down from 4.1% in August. Total social financing, a broad measure of credit and liquidity, rose 7.1% year-on-year in September, a slight decrease from 7.2% in August.