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Government might loosen credit policy in fourth quarter

(China Daily)

09:26, November 03, 2011

BEIJING - The new yuan lending of Chinese commercial banks will total nearly 7.5 trillion yuan ($1.17 trillion) in 2011, and the credit policy in the fourth quarter will be relatively loose, analysts said.

"As white-hot inflation is tamed, there will undoubtedly be some loosening of policies and increase of new loans in the last two months of 2011," said Ding Zhijie, dean of the School of Banking and Finance under the University of International Business and Economics in Beijing.

As of Oct 27, the Big Four lenders - Industrial & Commercial Bank of China Ltd, China Construction Bank Co, Agricultural Bank of China Ltd, and Bank of China Ltd - have made new yuan loans valued at more than 140 billion yuan last month, China Securities Journal cited an anonymous banking industry source as saying on Wednesday.

And during the five working days from Oct 21 to 27, new yuan lending surged more than 60 billion yuan, signaling an accelerated outflow of new loans from major Chinese lenders, it said.

"In the fourth quarter, the total credit will remain comparatively loose. Especially in last two months, the new yuan lending each month will be somewhere above 650 billion," the source said, adding that total lending this year will probably stand at 7.5 trillion yuan.

In the first nine months this year, commercial banks in China lent out 5.69 trillion yuan. In the third quarter, new loans at banks each month stood at about 500 billion yuan.

But Li Wei, economist at Standard Chartered Bank (China) Ltd, said even if the government encourages banks to lend in the last two months this year, new lending for the whole year will not be more than 7.3 trillion yuan.

"Demand for loans usually declines at the year's end, and regulators often impose more requirements on banks then," said Li, adding that the numbers of ongoing projects could not support excessive lending.

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