CIHKY - China bank lending slumps in July against weakening economy credit backdrop
2023-08-11 11:27:09 ET
China's new bank loans in July sank to the lowest level since late 2009 against a backdrop of weaker credit even as the nation's policymakers trimmed interest rates and pledged more support for the flagging economy.
On Wednesday, China's consumer price index fell for the first time in more than two years , and other warning signs flashed , in contrast to the economic surge that was predicted when the country ended its zero-COVID policies late last year.
July is typically a weak month in bank lending in China, but the latest report came in much lower than analysts expected. Chinese banks provided 345.9B yuan ($47.80B) of new yuan loans in July, off 89% from June, Reuters reported, citing data from the People's Bank of China. Analysts polled by the news organization expected 800B yuan of new loans during the month.
The Chinese yuan ( CNY:USD ) slipped 0.2% against the U.S. dollar and has weakened 5.9% against the greenback since the beginning of the year. WisdomTree Chinese Yuan Strategy ETF ( NYSEARCA: CYB ) -0.1% . SPDR S&P China ETF ( NYSEARCA: GXC ) fell 3.2% in Friday morning trading.
Note that the world's four largest banks are Chinese banks, according to S&P Market Intelligence. Industrial and Commercial Bank of China ( OTCPK:IDCBY ) ( OTCPK:IDCBF )is the largest bank with total assets of $5.74T, according to the S&P rankings published in April. Following are: China Construction Bank ( OTCPK:CICHY ) ( OTCPK:CICHF ) at $5.02T, Agricultural Bank of China ( OTCPK:ACGBY ) ( OTCPK:ACGBF ) at $4.92T, and Bank of China ( OTCPK:BACHF ) ( OTCPK:BACHY ) at $4.19T. The first non-Chinese bank in the list is No. 5, JPMorgan Chase ( JPM ) at $3.67T.
American depositary receipts of Chinese banks traded in the red on Friday. Industrial & Commercial Bank of China ( OTCPK:IDCBY ) ADRs fell 1.6% , China Construction Bank ( OTCPK:CICHY ) -1.2% , Agricultural Bank of China ( OTCPK:ACGBY ) -2.0% , Bank of China ( OTCPK:BACHY ) -0.9% , China Merchants Bank ( OTCPK:CIHKY ) -3.5% .
More on the Chinese Economy:
- West-China Economic Friction: Gleefully Marching Toward Potential Disaster
- China cuts lending benchmarks to prop up slowing economy
- China trade surplus narrows sharply in July
- China service sector growth of 54.1 in July beats forecast
- China's manufacturing shrinks for first time in three months in July
- GXC: Staying Selective on China Following the July Politburo Meeting
For further details see:
China bank lending slumps in July against weakening economy, credit backdrop