POLL-China's Oct new loans seen lower but credit easing on track
(Repeats story from Thursday; no change to text)
money supply poll data
new loans poll data
* Oct new loans seen at 862 bln yuan vs Sept's 1.38 trln
* Oct M2 money supply growth rising 8.4 pct y/y vs 8.3 pct
* Loans, money supply data due Nov 10-15
BEIJING, Nov 8 (Reuters) - New banks loans in China likely
fell in October due to a seasonal lull but were still well ahead
of historical trends as policymakers urge lenders to keep
cash-starved firms afloat as the economy slows, a Reuters poll
Banks likely extended 862 billion yuan ($196.56 billion) in
net new yuan loans in October, a traditionally weaker month due
to long holidays, according to the poll, which surveyed 32
While the figure appears modest compared with the 1.38
trillion yuan increase in new loans in September, it would mark
the biggest October gain since Reuters started compiling the
data in 1990.
Chinese policymakers have stepped up efforts in recent
months to keep credit flowing to struggling smaller firms,
especially private companies which account for 60 percent of the
economy and 80 percent of urban jobs. But banks prefer dealing
with firms which have state banking, considering them lower
Serena Zhou, China economist with Mizuho Securities in Hong
Kong, said the drop in loans from September did not suggest a
significant change in policy direction.
"The expected dip was mainly due to unfavourable seasonality
in October," said Zhou, referring to the National Day lull.
She estimates the October average for the past three years
was even lower, at 663 billion yuan.
The impact on smaller firms has been compounded by mounting
U.S. tariffs on Chinese goods and retaliatory measures in kind
by Beijing, which is hurting sales and driving up operating
costs. But investment and consumption in China had already been
showing signs of slowing before the trade dispute flared.
China has released net liquidity worth 2.3 trillion yuan
($332.04 billion) into the market by reducing banks' reserve
requirements this year, after offsetting maturing medium-term
lending facility loans, according to central bank chief Yi Gang.
Broad M2 money supply was seen rising 8.4 percent in October
from a year earlier, slightly higher than September's pace of
8.3 percent, according to the poll.
Annual outstanding yuan loan growth was seen at 13.3 percent
in October, also reflecting a marginal pick-up from September.
Total new bank loans in January-September jumped 17.7
percent from a year earlier to 13.14 trillion yuan, and are on
track for another record year.
But the increased lending has barely compensated for
shrinking shadow loans as regulators continued their crackdown
on riskier types of financing. The shadow banking sector has
been a significant source of funds for private firms.
A shift to more aggressive credit easing at the same time as
business is slowing could also risk a flareup in debt in China,
undermining a multi-year government campaign to reduce systemic
financial risks. Corporate bond defaults are on track to hit a
record this year.
"Activity growth is in a tug of war. Administrative policy
loosening has stepped up, but local governments still face a
dilemma as the central government has also made requests to
control local government debt," analysts from Goldman Sachs
wrote this week.
"Weaker sentiment because of the trade dispute has continued
to weigh on domestic economic activities such as car sales."
The People's Bank of China (PBOC) is due to release the
October lending and money supply data sometime during Nov.
(Reporting by Yawen Chen and Ryan Woo; Additional Reporting by
Kevin Yao; Editing by Kim Coghill)
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