China Economic Review
Charting China’s changing economic terrain · Since 1990
China banks to slow lending with low targets
August 5, 2009
China’s two biggest state-owned commercial banks have put a lid on their 2009 lending targets, according to domestic media reports, in a move that will significantly slow overall Chinese credit growth in the second half.Industrial and Commercial Bank of China (ICBC) is aiming to issue full-year new loans of RMB1 trillion ($146.4 billion), while China Construction Bank (CCB) has set a goal of RMB900 billion, Caijing magazine reported.
The two banks, China’s largest by market value, granted new loans of RMB825.5 billion and RMB709 billion, respectively, in the first half of the year. If they stick to their reported targets, this would imply that ICBC would have already issued 83% of its full-year lending total, while CCB would have already issued 79%.
Forbes said that in a recent report, the central bank listed several factors that could boost or discourage lending over the rest of the year. It said that a solidified economic recovery, especially in the real estate sector, would push up overall demand for loans and that there would also be sustained demand from construction projects that were already under way.
But other factors could cause a credit slowdown, it said.
Some money lent in the first half had not yet been put to use and banks might also slow the pace of loan issuance as they bump up against the limits of required capital adequacy ratios.