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Big banks' lending grinds to halt in first half of may by ferujkll sdff
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Big banks' lending grinds to halt in first half of may |
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Business,Business News,Business Opportunities
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China's "Big Four" banks made almost no new loans in the first twoweeks of May, after a surprise drop in new loans in April,highlighting liquidity strains that have persisted despite thecentral bank's monetary easing. Citing an unidentified insider, the China Securities Journalreported that two of the banks saw only minor loan growth of lessthan 10 billion yuan ($1.59 billion), while new lending actuallycontracted at the other two. The article didn't say which banksfell into either category. The "Big Four" - Industrial & Commercial Bank of China Ltd,China Construction Bank Corp, Bank of China Ltd and AgriculturalBank of China Ltd - usually account for 30 percent of new yuanloans each year.
The dismal performance followed an overall drop in new loans lastmonth. Financial institutions in China extended 681.8 billion yuanof loans in April, a sharp fall from 1.01 trillion yuan in Marchand far below market expectations. The loan data "show that corporate demand for loans remains tooweak to reverse ... With sluggish demand, an interest rate cut,even if an option in the future, is not necessarily an effectivetool to ease liquidity," said Zhou Hao, a global market analyst atANZ China.
Zhao Qingming, senior researcher at CCB, said the sluggish loangrowth stems from weak credit demand, the result of slackindustrial production. A marked sign of this situation was electricity consumption inApril, which rose just 3.7 percent year-on-year, the slowest in thepast 16 months. The nation posted a larger-than-forecast trade surplus of $18.4billion in April. But foreign direct investment contracted 0.7percent from a year earlier to $8.4 billion, the sixth straightmonthly fall. In response to the economic deceleration, the People's Bank ofChina, the central bank, cut banks' reserve requirement ratio by0.5 percentage point on Saturday.
It was the central bank's thirdsuch reduction in six months. Market participants overwhelmingly expect further reduction in theratio to add liquidity to the markets. Chief economist of Bank of Communications Lian Ping forecast one tothree cuts this year of 0.5 percentage point each. Chief economist of Shenyin Wanguo Securities Li Huiyong forecasttwo cuts this year.
But Zhao said increasing liquidity is not enough to spur borrowing.Demand will rise only when interest rates drop. I am Chargers writer, reports some information about best decaf coffee , fresh salsa recipe.
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