, China

Chinese banks new loans crashes to $186b in August as credit crunch hits SMEs

Banks have been shunning riskier corporates over consumer loans.

Reuters reports that the new loans extended by Chinese banks fell from $211b in July to $186.95b (CNY1.28t) in August despite policy efforts to stimulate lending for credit-short SMEs.

“Financing demand is relatively weak as firms are unwilling to borrow,” Luo Yunfeng, chief analyst at Merchants Securities in Beijing told Reuters.

Outstanding yuan loans booked double-digit growth worth 13.2% YoY in August.

In a breakdown, corporate loans fell from $94.93b (CNY650.1b) to $89.47b (CNY612.7b) in August whilst household loans picked up sharply from CNY634.4b to CNY701.2b, adding to growing evidence that banks are embracing consumer loans over riskier corporates that could book deteriorating asset quality.

The government has been actively encouraging banks to ramp up lending to struggling firms and has since cut the required reserve ratio by three times this year.

However, banks remain cautious after their nonperforming loans hit a nine-year high from $26.56b (CNY182.9b) in Q1 to a whopping $284.64b (CNY1.96t) in Q2 as the deleveraging campaign squeezed liquidity conditions in the banking sector which accelerated the rate of slippages and deteriorating asset quality.

Here’s more from Reuters:

Join Asian Banking & Finance community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

Top News

What is Lorem Ipsum?
What is Lorem Ipsum? Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.

Exclusives

Sed molestie interdum dui sit amet egestas
It is a long established fact that a reader will be distracted by the readable content of a page when looking at its layout.
CIMB Niaga leads the way in captivating Indonesia’s youth
The bank’s digital solutions are winning over younger generations with 3.2M mobile users and 96% digital transaction rate in 2023.