Cutting two rates

The People’s Bank of China (PBC) announced on the 25th of August that it was cutting the one-year benchmark bank lending rate by 25 basis points to 4.6 percent, cutting one-year benchmark deposit rates by the same amount, and reducing reserve requirements (RRR) by 50 basis points to 18 percent for most big banks. In addition, PBC has allowed the yuan to depreciate almost 2 percent against the U.S. dollar in August. 

According to PBC statistics, the outstanding amount of all RMB loans by financial institutions stood at 88.79 trillion yuan at end-June 2015, up 13.4 percent year on year, a deceleration of 0.6 percentage points from the end of the previous quarter. Outstanding RMB loans rose by 6.56 trillion yuan in the January-June period, 537.1 billion yuan more than the increase in the same period last year. The uses of loans have the following features:

1. Short-term enterprise loans and bill financing grew faster
At end-June, the outstanding amount of RMB and foreign currency loans to enterprises and other sectors reached 66.94 trillion yuan, up 11.3 percent yoy, a deceleration of 0.7 percentage points from the end of the previous quarter. The increase in the January-June period posted 4.62 trillion yuan, 74.7 billion yuan more than in the same period last year.

By loan maturity, at end-June, RMB and foreign currency short-term loans and bill financing to enterprises and other sectors posted an outstanding amount of 30.66 trillion yuan, rising by 9.4 percent yoy, 0.9 percentage points higher than a quarter earlier, and the increase in the January-June period registered 2.16 trillion yuan, 232 billion yuan more than in the same period last year; medium and long-term (MLT) loans in RMB and foreign currencies to enterprises and other sectors recorded an outstanding amount of 34.41 trillion yuan, increasing by 13.4 percent yoy, a deceleration of 0.9 percentage points from the end of the previous quarter, and the increase in the January-June period registered 2.31 trillion yuan, 167.2 billion yuan more than the growth in the same period last year.

By loan use, RMB and foreign currency fixed asset loans to enterprises and other sectors posted an outstanding amount of 28.17 trillion yuan, rising by 12.2 percent yoy, a deceleration of 1.7 percentage points from a quarter earlier; business loans recorded an outstanding amount of 29.4 trillion yuan, up 9.4 percent yoy, an acceleration of 0.1 percentage points from the end of the previous quarter.

2. Lending to micro and small enterprises grew faster than overall lending in the same period
At end-June, RMB micro and small enterprise (MSE) loans posted an outstanding amount of 16.23 trillion yuan, representing a yoy growth of 14.5 percent, a deceleration of 1.5 percentage points from the end of the previous quarter. The growth rate surpassed that of loans to large enterprises and that of loans to medium enterprises in the same period by 5.2 and 3.3 percentage points, respectively. It was 1.1 percentage points higher than overall loan growth in the same period.

At end-June, outstanding MSE loans accounted for 30.1 percent of outstanding enterprise loans, a proportion 0.1 percentage points lower than a quarter earlier. In the January-June period, MSE loans grew by 948.6 billion yuan, 85 billion yuan less than in the same period last year. The increase represented 26 percent of new loans to enterprises in the same period, basically unchanged from a quarter earlier.

3. Growth of MLT loans to the service sector fell back
At end-June, MLT industrial loans in RMB and foreign currencies posted an outstanding amount of 7.37 trillion yuan, rising by 5.8 percent yoy, down 1.4 percentage points from the end of the previous quarter. The increase in the January-June period registered 240.5 billion yuan, 115.9 billion yuan less than in the same period last year. Specifically, outstanding MLT loans to heavy industries stood at 6.52 trillion yuan, rising by 5.7 percent yoy, down 1.4 percentage points from the end of the previous quarter; outstanding MLT loans to light industries posted 847.7 billion yuan, rising by 6.6 percent yoy, a deceleration of 1.5 percentage points from the end of the previous quarter.

At end-June, MLT service sector loans posted an outstanding amount of 22.51 trillion yuan, rising by 17.7 percent yoy, a deceleration of 0.9 percentage points from the end of the previous quarter. Specifically, outstanding MLT loans to transport, warehousing and postal industries increased by 13.1 percent yoy, down 1.4 percentage points from a quarter earlier; outstanding MLT loans to culture, sports and entertainment industries saw a yoy growth of 21.7 percent, down 3.6 percentage points from a quarter earlier.

4. Lending to the agricultural sector, rural areas and farmers slowed
At end-June, RMB and foreign currency loans to rural areas (at or below the county level) recorded an outstanding amount of 20.72 trillion yuan, rising by 11.9 percent yoy, 1.5 percentage points lower than a quarter earlier. The increase in the January-June period registered 1.34 trillion yuan, 195.4 billion yuan less than in the same period last year. Outstanding loans to farmers registered 5.84 trillion yuan, decelerating by 1.2 percentage points from a quarter earlier to see a yoy growth of 15.5 percent. The increase in the January-June period was 473 billion yuan, shrinking by 82 billion yuan yoy. Outstanding agricultural loans posted 3.52 trillion yuan, rising by 6.4 percent yoy, down 2.1 percentage points from the end of the previous quarter. The increase in the January-June period was 192.2 billion yuan, 79.2 billion yuan less than in the same period last year.

5. Property loans grew steadily
At end-June, RMB property loans posted an outstanding amount of 19.3 trillion yuan, rising by 19.4 percent yoy, essentially the same pace as a quarter earlier. In the January-June period, the increase in RMB property lending expanded by 344.4 billion yuan yoy to 1.88 trillion yuan, accounting for 28.7 percent of the total of new loans in the same period, 1.9 percentage points higher than that recorded for the same period last year.

At end-June, housing development loans outstanding stood at 4.88 trillion yuan, rising by 20.9 percent yoy, a deceleration of 1.3 percentage points from the end of the previous quarter. Land development loans posted an outstanding amount of 1.54 trillion yuan, rising by 32.8 percent yoy, up 2.2 percentage points from the end of the previous quarter. Personal home loans outstanding grew by 17.8 percent yoy to 12.64 trillion yuan, an acceleration of 0.2 percentage points from the end of the previous quarter, surpassing overall loan growth by 4.4 percentage points. In the January-June period, personal home loans outstanding saw an increase of 1.12 trillion yuan, expanding by 176.7 billion yuan yoy.

At end-June, outstanding loans for low-income housing development posted 1.53 trillion yuan, rising by 58.2 percent yoy, a deceleration of 6.1 percentage points from the end of the previous quarter. The increase in the January-June period expanded by 149.3 billion yuan yoy to 389.5 billion yuan, representing 68.6 percent of the increase in housing development loans in the same period, 21.2 percentage points higher than that recorded for the same period last year.

6. Growth of household consumer loans picked up
At end-June, RMB and foreign currency household loans recorded an outstanding amount of 25.11 trillion yuan, rising by 15.5 percent yoy, down 0.2 percentage points from the end of the previous quarter. The increase in the January-June period posted 1.95 trillion yuan, expanding by 75.4 billion yuan yoy.

Outstanding household consumer loans increased by 19.6 percent yoy to 16.98 trillion yuan at end-June, accelerating by 1.1 percentage points from the end of the previous quarter. The increase in the January-June period was 1.6 trillion yuan, 389.7 billion yuan more than in the same period last year. The outstanding amount of household loans for business purposes rose by 7.9 percent yoy to 8.14 trillion yuan, 2.5 percentage points lower than a quarter earlier. The increase in the January-June period posted 350.9 billion yuan, 314.3 billion yuan less than in the same period last year.

Source: http://www.pbc.gov.cn/english/130721/2942627/index.html

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