New lending at China’s four biggest banks rose by about 20 billion yuan (US$3.2 billion) in the first two months of this year from a year earlier, Industrial and Commercial Bank of China Ltd (ICBC, 中國工商銀行) president Yang Kai-sheng (楊凱生) said.
ICBC, the nation’s biggest commercial bank, increased its lending in that period by 15 billion yuan to 165.5 billion yuan, Yang told reporters yesterday at a meeting of the Chinese People’s Political Consultative Conference in Beijing.
Chinese policymakers are under pressure to ease lending curbs after economic growth fell to the slowest pace in 10 -quarters as the eurozone debt crisis has capped export demand and home sales have fallen.
The Chinese authorities have pledged to boost credit support for small businesses, major -government-backed projects and the construction of affordable housing this year.
The People’s Bank of China last month cut the amount of deposits that lenders must set aside as reserves after new lending in January was the lowest for that month in five years. The week-long Lunar New Year holiday was celebrated in January this year for the first time since 2009.
Data for new loans last month will be released later this month.
ICBC, China Construction Bank Corp (中國建設銀行), Agricultural Bank of China Ltd (中國農業銀行) and Bank of China Ltd (中國銀行) are the nation’s biggest commercial lenders.
China’s lending peaked in 2009 when officials allowed a credit boom to counter the effects of the global financial crisis, raising concerns that asset quality could deteriorate.
Non-performing loans at Chinese banks increased for the first time since late 2008 in the fourth quarter of last year, reaching 427.9 billion yuan as of Dec. 31, while the bad-loan ratio climbed from 0.9 percent to 1 percent at the end of the third quarter, the China Banking Regulatory Commission said on Feb. 17.
ICBC’s non-performing loan ratio has fallen from more than 1 percent at the end of last year to about 0.9 percent, Yang said. The level of bad loans at China’s biggest banks are “healthy” and “stable,” he added.
Competition among banks for deposits has intensified after the savings rate fell behind inflation, prompting a diversion of money to higher-yield investment products.
Depositors last month pulled 800 billion yuan out of savings accounts, about 1 percent of China’s total, central bank data showed. It was the largest monthly decline in at least 12 years, according to data compiled by Bloomberg.
The industry’s average loan-to-deposit ratio rose to a five-year high of 69.3 percent in January and pressure on liquidity looks likely to constrain credit growth this year, Sanford C. Bernstein analyst Mike Werner said in a note last month.
ICBC’s loan-to-deposit ratio is about 60 percent, Yang said yesterday.
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