China May new loans fall below forecasts

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Data from the central bank on Tuesday showed banks extended 1.15 trillion yuan (179.58 billion US dollars) in net new yuan loans in May, edging down from 1.18 trillion yuan in April.

The figure was 40.5 billion yuan more than the same period last year, the People's Bank of China said in an online statement.

As of the end of May, outstanding yuan loans grew by 12 percent from a year earlier to 132.89 trillion yuan, and compared with a rise of 12.7 percent in April.

The M2, a broad measure of money supply that covers cash in circulation and all deposits, grew by 8.3 percent year-on-year, unchanged with a month earlier.

The narrow measure of money supply (M1), which covers cash in circulation plus demand deposits, rose by 6 percent year-on-year at the end of May, down from 7.2 percent at the end of April.

In recent weeks, the Chinese authorities have stepped up policy support to the economy to make sure there is ample liquidity in the financial system.

Meanwhile, China’s total social financing (TSF), a broad measure of credit and liquidity in the economy, dropped sharply to 760.8 billion yuan in May from 1.56 trillion yuan in April, data from the central bank showed on Tuesday.

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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.

China is in the third year of a regulatory push to reduce risks in the financial system and regulators continue to roll out measures to improve supervision and risk control in the financial sector.

However, there are expectations the central bank could loosen some of its policy settings to ensure the crackdown on risks and resulting hit to credit growth does not hurt the real economy.

(With inputs from news agencies)