SHANGHAI: China's banks stepped up their lending in September, the central bank announced Thursday, but analysts said more monetary easing was needed to bolster the weakening economy.
Domestic banks extended 857.2 billion yuan (US$139.9bil) in new loans, the People's Bank of China (PBoC) said in a statement, up more than a fifth from the 702.5 billion yuan lent in August.
The September figure also beat a median forecast of 745 billion yuan from a Wall Street Journal poll of 15 economists.
Analysts attributed the rebound in new lending to China's "targeted" easing introduced earlier this year, which included cuts in reserve requirements for some banks.
Last month also saw the PBoC pump 500 billion yuan into the country's top five banks in a bid to boost lending to small businesses and kickstart the economy.
"New loans have recovered to the normal level, probably reflecting the ongoing targeted easing by the PBoC," ANZ economists Liu Ligang and Zhou Hao wrote in a research note.
But total social financing, a broader gauge of credit in the overall economy, remained "lukewarm", they said.
Social financing stood at 1.05 trillion yuan for September, the PBoC said, down from 1.4 trillion yuan for the same month a year ago.
"This suggested that the de-leveraging of shadow banking activity continues," ANZ said.
Authorities have sought to crack down on "shadow banking" – a huge network of lending outside formal channels and beyond the reach of regulators, including activities by online finance platforms, credit guarantee companies and microcredit firms.
"Credit demand from the real economy remains weak," Ma Xiaoping, Beijing-based economist for British bank HSBC, told AFP.
"There's room for further easing on the policy front, and the central bank is more likely inclined to the targeted approach," she said.
Separately, the central bank also said China's foreign exchange reserves slipped to US$3.89tril at the end of September, from US$3.99tril at the end of June.
China has the world's largest foreign exchange reserves, the bulk of which are believed to be held in US dollars.
Analysts said the decline was unexpected, but were divided over the possible reason. ANZ said it might have been caused by the central bank selling US dollar reserves.
"It appears that China's central bank (has) sold USD reserves, reflecting the PBoC's intention to reduce its foreign reserve assets," it said.
But Capital Economics suggested the fall did not mean the PBoC had started to offload part of its reserves, saying the change was caused by a weaker euro and Japanese yen. – AFP