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Banks report record loan growth in Jan

By Wang Xu (chinadaily.com.cn)
Updated: 2009-02-12 12:04

Chinese banks reported a record 1.62 trillion yuan in new loans in January 2009, up 101 percent from a year earlier.

Related readings:  China's bank loans see record growth  China's ICBC reports 14% rise in '08 loans  Bank loans likely to grow in 2009

The big increase was part of the banks' effort to support the government's $586 billion stimulus package, which calls for, among other things, an increase in credit to help China's cash-strapped industries.

Central Bank's figures showed that the amount of the new loans in January equaled to about 30 percent of all new lending in 2008.

Separately, the central bank said that M2, the broad measure of money supply in January 2009 grew 18.8 percent from a year earlier. M2 grew 17.8 percent in December 2008.

"Credit expansion in the first quarter of 2009 is expected to be very high because banks can maximize investment returns by front-loading new loans," said Jing Ulrich, managing director and chairwoman of China Equities at JP Morgan.

Ulrich also cautioned about a possible rise in credit risk because the increase in liquidity could replicate the problems seen in the middle 1990s that resulted in industrial overcapacity and a sharp rise in banks' non-performing loans.