UPDATE 1-China’s banks throw open spigots in January, lend record 3.23 trln yuan

* Nov new loans 3.23 trln yuan vs f’cast of 2.8 trln yuan * M2 money supply up 8.4 pct y/y, vs f’cast of 8.2 pct * TSF 4.64 trln yuan, up from Dec’s 1.59 trln yuan * Jan new loans, TFS hit record highs * Turning around weak credit growth key to steadying economy-analysts BEIJING, Feb 15 () – China’s banks made the most new loans on record in January as policymakers try to jumpstart sluggish investment and prevent a sharper slowdown in the world’s second-largest economy. Chinese banks tend to front-load loans early in the year to get higher-quality customers and win market share. But they have also faced months of pressure from regulators to step up lending, particularly to cash-starved private firms. Banks extended a record 3.23 trillion yuan ($476.87 billion) in net new yuan loans in January, sharply more than expected and eclipsing the last high of 2.9 trillion yuan in January 2018. Analysts polled by had predicted new yuan loans of 2.8 trillion yuan last month, up from 1.08 trillion yuan of new loans in December. Sources told last week that the central bank had urged some banks to moderate their pace of lending in January to manage the amount of money flowing into the economy, spurring talk that the tally was even more robust than first thought. Demand for credit picked up sharply in the corporate sector, followed by the household sector, according to data released by the People’s Bank of China (PBOC) on Friday. Corporate loans jumped to 2.58 trillion yuan from 473.3 billion yuan in December, while household loans rose to 989.8 billion yuan from 450.4 billion yuan, according to calculations based on the PBOC data. Corporate loans accounted for 80 percent of new loans in January, up sharply from 44 percent in December. That will be welcome news for policymakers, who have been struggling to get money to struggling smaller firms. While the PBOC has been pushing ample funds into the financial system, the money has not been flowing smoothly into the economy and generating activity. Banks have been wary of lending to struggling smaller firms with higher credit risks, while businesses are reluctant to take on more debt when sales and profits are weakening Several other key credit gauges also picked up modestly in response to the PBOC’s recent shift to policy easing. Broad M2 money supply grew 8.4 percent in January from a year earlier, also beating forecasts. Analysts had expected M2 growth to rise 8.2 percent for the month, compared with 8.1 percent in December. Outstanding yuan loans grew 13.4 percent from a year earlier, above expectations of 13.1 percent but easing from December’s rise of 13.5 percent. Growth of outstanding total social financing (TSF), a broad measure of credit and liquidity in the economy, picked up to 10.4 percent from a record low of 9.8 percent in December. TSF includes off-balance sheet forms of financing that exist outside the conventional bank lending system, such as initial public offerings, loans from trust companies and bond sales. TSF hit a record 4.64 trillion yuan in January, also far more than expected. Analysts polled by had predicted the gauge would rise to 3.25 trillion yuan from 1.59 trillion yuan in December. TSF can provide some clues on activity in China’s vast and unregulated shadow banking sector, which authorities have been targeting in a campaign to reduce systemic financial risks. Reporting by Judy Hua, Kevin Yao and Beijing Monitoring Desk;
editing by Kim CoghillOur Standards:The Thomson Trust Principles.