As we have repeatedly noted, loan demand remains weak in China as the economy slows. As I have discussed before, cutting RRR is not easing (and PBOC’s governor has made the same point already), it should not be a surprise that new loans have disappointed the market for 2 straight months, and it seems that the market is set to be disappointed once more by credit growth.
21cbh.com reports that China’s big 4 banks lent less than RMB20 billion in the first 2 weeks of March. Except ICBC, 3 of the other big 4 banks (Bank of China, China Construction Bank, Agricultural Bank of China) experienced negative growth in new loans. Meanwhile, deposit growth appears to have stalled in March as well after strong inflow in February, with many banks showing negative growth in new deposits, with the big 4 banks only getting RMB50 billion.
The report attributes weak loan growth to “weak demand from large corporates” as the economy slows. With a 14% growth target of M2 money supply for 2012, we would wonder if this is an achievable target if loan growth continues to be weak throughout the year. Of course, there will be another story if the government force someone to borrow money. How this is possible, we have no idea.
