Lending surge is no problem, says PBC

CHINA'S central bank vice governor said he sees no risks in the surge in new lending this year.

The People's Bank of China and other regulators have found little evidence that a significant amount of new lending has flowed into the stock market, the China Securities Journal reported yesterday on its Website, citing vice governor Su Ning. Su said the situation is "not serious."

Banks extended fewer loans last month compared with January, Su said, without giving a figure. Credit growth is likely to slow later this year because banks tend to front-load their lending to take early profits.

"The whole-year credit growth should be within a rational range," he said.

Banks in China extended 1.62 trillion yuan (US$237 billion) of new local-currency loans in January. At the same time, M2, the broadest measure of money supply, including deposits and cash, climbed 18.8 percent from a year earlier, topping the central government's 17 percent annual target, while the benchmark Shanghai Composite Index has gained 21 percent this year, triggering concerns of inflow of lending capital. February credit is expected to surge too.

China International Capital Corp, China's major investment bank, said it believes February's incremental loan amount will be from 900 billion yuan to 1 trillion yuan.

The official figures will be available next week.

After checking with the state-owned big four banks in China, CICC's banking sector analyst estimated they lent out 560 billion yuan in February. Given the big-four's 50 percent market share, the forecast is that nationwide new lending will top 1 trillion yuan.