China’s credit growth will slow from the “unsustainable” pace seen this year to about 15 percent in 2010 as a strengthening economy may reduce need for loan support, Goldman Sachs Group Inc. said.
Chinese banks, which advanced a record 7.37 trillion yuan ($1.1 trillion) of new loans in the first half, created the equivalent of two Indian banking industries and stoked concerns that loan quality may drop, Goldman Sachs analysts led by Roy Ramos said in a note dated yesterday.
The nation’s deposits surged by 10 trillion yuan to 56.6 trillion yuan as of June 30, suggesting part of the loans are “recycled back into deposits with banks, not plugging operating deficits,” the analysts wrote in the report.
China’s lending spree, encouraged by the government to support its 4 trillion yuan stimulus package, has fanned concerns that asset bubbles will form and non-performing loans will rise. The nation’s banking regulator has called on lenders to control the flow of credit several times since last week.
Industrial & Commercial Bank of China Ltd. and China Construction Bank Corp., the nation’s two largest lenders by assets, aim to cap their new loans at 200 billion yuan in the second half, 21st Century Business Herald reported today, citing people it didn’t identify.
ICBC, the world’s largest bank by market value, advanced 825.5 billion yuan of new loans in the first half and Construction Bank, the No. 2, extended 709 billion yuan.
Ensuring Growth
Plans to slow credit growth are “very welcome,” the Goldman Sachs analysts said.
China’s GDP expanded 7.9 percent in the second quarter as the nation became the first major economy to rebound from the global recession. The central bank said in a statement late yesterday that it plans to maintain a “moderately loose” monetary policy and that sustaining economic growth is “the top priority.”
New credit may reach 11 trillion yuan this year as the government refrains from clamping down on lending to protect economic growth, BNP Paribas SA said last week.
Chinese banks, which advanced a record 7.37 trillion yuan ($1.1 trillion) of new loans in the first half, created the equivalent of two Indian banking industries and stoked concerns that loan quality may drop, Goldman Sachs analysts led by Roy Ramos said in a note dated yesterday.
The nation’s deposits surged by 10 trillion yuan to 56.6 trillion yuan as of June 30, suggesting part of the loans are “recycled back into deposits with banks, not plugging operating deficits,” the analysts wrote in the report.
China’s lending spree, encouraged by the government to support its 4 trillion yuan stimulus package, has fanned concerns that asset bubbles will form and non-performing loans will rise. The nation’s banking regulator has called on lenders to control the flow of credit several times since last week.
Industrial & Commercial Bank of China Ltd. and China Construction Bank Corp., the nation’s two largest lenders by assets, aim to cap their new loans at 200 billion yuan in the second half, 21st Century Business Herald reported today, citing people it didn’t identify.
ICBC, the world’s largest bank by market value, advanced 825.5 billion yuan of new loans in the first half and Construction Bank, the No. 2, extended 709 billion yuan.
Ensuring Growth
Plans to slow credit growth are “very welcome,” the Goldman Sachs analysts said.
China’s GDP expanded 7.9 percent in the second quarter as the nation became the first major economy to rebound from the global recession. The central bank said in a statement late yesterday that it plans to maintain a “moderately loose” monetary policy and that sustaining economic growth is “the top priority.”
New credit may reach 11 trillion yuan this year as the government refrains from clamping down on lending to protect economic growth, BNP Paribas SA said last week.
