Bloomberg News

China’s Biggest Banks Boost Jan-Feb Loans, ICBC Says

March 09, 2012

Pedestrians walk past a branch of the Industrial and Commercial Bank of China (ICBC) Ltd., in Beijing. Photographer: Nelson Ching/Bloomberg

Pedestrians walk past a branch of the Industrial and Commercial Bank of China (ICBC) Ltd., in Beijing. Photographer: Nelson Ching/Bloomberg

(Corrects date for yuan deposits in ninth paragraph of story published on March 4.)

New lending at China’s four biggest banks rose by about 20 billion yuan ($3.2 billion) in the first two months of 2012 from a year earlier, Industrial and Commercial Bank of China Ltd. (3988) President Yang Kaisheng said.

ICBC, the nation’s biggest commercial bank, increased its lending in that period by about 15 billion yuan to 165.5 billion yuan, Yang told reporters today at meetings of the Chinese People’s Political Consultative Conference in Beijing.

Chinese policy makers are under pressure to ease lending curbs after economic growth moderated to the slowest pace in 10 quarters as Europe’s debt crisis capped export demand and home sales fell. Authorities have pledged to boost credit support for smaller businesses, major government-backed projects and the construction of affordable housing this year.

The People’s Bank of China last month cut the amount of deposits that lenders must set aside as reserves after new lending in January was the lowest for that month in five years. The week-long Lunar New Year holiday was celebrated in January this year for the first time since 2009. Data for February new loans will be released later this month.

ICBC (1398), China Construction Bank Corp. (939), Agricultural Bank of China Ltd. (601288) and Bank of China Ltd. are the nation’s biggest commercial lenders.

Bad Loans

China’s new lending peaked in 2009 as officials allowed a credit boom to counter the effects of the global financial crisis, raising concerns that asset quality may worsen.

Non-performing loans at Chinese banks increased for the first time since late 2008 in the fourth quarter of last year, reaching 427.9 billion yuan as of Dec. 31, while the bad-loan ratio climbed to 1 percent from 0.9 percent at the end of the third quarter, the China Banking Regulatory Commission said on Feb. 17.

ICBC’s non-performing loans ratio has fallen to about 0.9 percent from more than 1 percent at the end of last year, Yang said. The level of bad loans at China’s biggest banks are “healthy” and “stable,” he said.

Competition among banks for deposits has intensified after savings rates lagged behind inflation, prompting a diversion of money to higher-yield investment products. Depositors in January pulled 800 billion yuan from savings accounts, about 1 percent of China’s total, central bank data showed. It was the largest monthly decline in at least 12 years, according to data compiled by Bloomberg.

The industry’s average loan-to-deposit ratio rose to a five-year high of 69.3 percent in January and pressure on liquidity will constrain credit growth in 2012, Sanford C. Bernstein analyst Mike Werner said in note last month.

ICBC’s loan-to-deposit ratio is about 60 percent, Yang said today.

To contact the reporter on this story: Jun Luo in Shanghai at jluo6@bloomberg.net

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net


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