BEIJING: Chinese banks extended more loans last month, and the growth of money supply accelerated after the central bank eased monetary policies to bolster the economy.
The banks granted 900.8 billion yuan (US$145.1 billion) in new loans in May, 192.9 billion yuan more than the previous month but 4.3 billion yuan below May last year, the People’s Bank of China said in a statement yesterday.
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The loans extended were in line with hopes for 900 billion yuan, according to a Reuters poll.
M2, a broad measure of money supply, rose 10.8 percent in May from a year ago, 0.7 percentage points faster than April’s growth.
Total social financing, the broadest measure of credit supply that includes loans, bank acceptance bills, corporate bonds and equity financing, rose to 1.22 trillion yuan in May, up 163.9 billion yuan from April.
“The new loans meet with our expectations. Policy loosening is taking effect and the support for local government financing also contributed to the loan growth,” said Qu Hongbin, chief China economist of HSBC.
“Financing from bonds and equities was higher than last year, but only a limited part of the new liquidity can be transferred to the real economy.”
The central bank has cut interest rates thrice and lowered bank reserve requirements twice since November.
