Chinese banks expect to fall short of loan targets
(29 May 2012 – China) Due to a spreading economic downturn, China’s banking sector is expected to fall short of loan targets for the first time in about seven years.
A drop in lending in April and May make it likely that banks’ total new loans for 2012 will come to some US$1.1 trillion (A$1.12 trillion), far less than the estimated government goal of US$1.3 trillion.
Banks are relying more and more on small and medium enterprises for loan growth after a sharp fall in demand from the biggest state- owned borrowers.
The economy is projected to grow at its slowest pace in 13 years this year.
New bank loans last month dropped 33 percent from March to US$107 billion, well below the US$123 billion median forecast by economists.
Lending might decelerate further in May as the four biggest banks that account for about 40 percent of lending have advanced only US$5.4 billion as of 20 May.
Fitch Ratings last week warned that China’s non-performing debt and special-mention loans were vastly understated and banks’ cushions are thinning as deposit growth slows and forbearance reduced loan repayments.
Banks are relying more and more on small and medium enterprises for loan growth after a sharp fall in demand from the biggest state- owned borrowers.
The economy is projected to grow at its slowest pace in 13 years this year.
New bank loans last month dropped 33 percent from March to US$107 billion, well below the US$123 billion median forecast by economists.
Lending might decelerate further in May as the four biggest banks that account for about 40 percent of lending have advanced only US$5.4 billion as of 20 May.
Fitch Ratings last week warned that China’s non-performing debt and special-mention loans were vastly understated and banks’ cushions are thinning as deposit growth slows and forbearance reduced loan repayments.
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