China Construction expects above 10% new loans growth

China targets cutting lending by $310bln prompting smaller banks to raise capital to boost adequacy ratio.

China Construction Bank said its new lending will grow by a modest 10 percent or more this year, as banks slow new loans growth following a lending binge in 2010 under Beijing's economic stimulus programme.

CCB Chairman Guo Shuping gave Reuters the forecast on the sidelines of the National People's Congress in Beijing on Monday, adding that the bank expected its provision ratio for non-performing loans to remain above 170 percent this year.

Chinese banks posted a record 9.6 trillion yuan ($1.406 trillion) in new loans last year, fuelling concern they were sowing the seeds for a new crop of bad debts down the road.

The government has targeted 7.5 trillion yuan ($1.09 trillion) in new lending this year, down from last year but a figure that would still lift the industry's overall outstanding loan volume by 19 percent from the end of 2009.

CCB and China's other biggest lenders including ICBC were relatively conservative in their lending last year compared with mid-sized and smaller banks, which sharply turned up lending in response to Beijing's 4 trillion yuan stimulus plan aimed at boosting consumption.

As a result, many of those smaller banks are believed to need new capital to boost their adequacy ratios.

View the full story in Reuters.