(24 February 2012 – Asia) China’s “big four” banks have started the year with an abnormally slow lending pace.Industrial & Commercial Bank of China Ltd, China Construction Bank Corporation, Bank of China Ltd and Agricultural Bank of China Ltd together extended new loans amounting to US$11.1 billion (A$10.4 billion) in the first three weeks of February, which is uncharacteristic said state-run Shanghai Securities News without giving comparable data.
The big four traditionally account for a third of all new loans. They normally front-load lending in the first few months every year to boost market share.
The slow lending pace is worse than January when the entire banking industry issued US$117 billion in new loans, a 29 percent plunge year-on-year. The amount is the lowest for new loans for a January since 2007.
China International Capital Corporation, however, said banks could issue up to US$127 million in new loans this month. Citic Securities estimated that overall new loans could reach US$270 billion in February and March.
Chinese banks are required to maintain a loan-to-deposit ratio of about 75 percent daily. With deposit growth weak, investors are chasing higher returns in the face of rising inflation.
In a bid to boost lending, the People’s Bank of China, the central bank, said it was cutting banks’ reserve requirement ratio by 0.5 percentage point effective Friday.