Big Four Banks Struggle With Tepid Loan Growth


February 22 -- The four largest commercial banks extended about 70 billion yuan of new loans as of February 19, with the amount lent during the first two weeks only totaling 30 billion yuan, and one bank even reported negative new loan growth, reports Shanghai Securities News, citing an insider.

An industry insider said the weakness in new loan growth was related to problems in lending to local government financing platforms, which were the main sources of loan growth during the past three years.

There are restrictions on lending to local government financing platforms, loans to these platforms are maturing, and banks are finding it difficult to find new targets for lending, said the insider. 

Shenyin and Wanguo Securities said another reason for the weak loan growth was because a number of large banks gave branches loan targets of only 40-50 percent of new deposits after the Spring Festival.

The low loan growth was due to the strict daily supervision of the deposit-loan ratio, and weaker demand for loans by enterprises along the coast due to the bleak economic prospects, according to the report.

Following the recent cut in the reserve requirement ratio by 0.5 percentage point, CITIC Securities (600030,6030.HK) predicts banks will extend a total of 1.5-1.7 trillion yuan of new loans in February and March.

Shenyin and Wanguo Securities forecasts total new loan growth of 830 billion yuan in February, and 840 billion yuan in March. CICC anticipates new loan growth of 750-850 billion yuan in February.

Shares of Bank of China (601988,3988.HK) fell 0.65 percent to trade at 3.06 yuan per share at 9:51 today.


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