China’s Finance Authorities Step up Scrutiny of Real Estate Lending

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China’s top financial authorities are stepping up measures to maintain Beijing’s prevailing property policy stance that “houses are for occupation, not speculation.”

The China Banking and Insurance Regulatory Commission (CBIRC) recently issued a directive declaring that it would conduct specialist investigations of real estate lending operations by banks across 32 Chinese cities, encompassing the execution of real estate lending policies alongside the management of real estate development loans and personal home loans.

At the same time the Chinese central bank also recently called for further optimisation of the bank lending structure, pointing in particular to the comparatively high share of the real estate sector.

Data from Wind indicates that in the first half of 2019 China’s A-share banks saw 6.4% growth in personal home loans compared to the end of 2018, for a deceleration compared to the increase of nearly 7% posted in the same period last year.

The big four state-owned banks saw personal home loan growth of around 7% in the first half, with China Construction Bank posting the lowest increase of just 4.3%.

China CITIC Bank, Shanghai Pudong Development Bank, China Merchants Bank and Huaxia Bank all saw personal home loan growth of over 10% in the first half compared to the end of 2018, with increases of 14%, 13.1%, 11.5% and 10.7% respectively.

Ping An Bank, China Minsheng Bank and China Everbright Bank saw the smallest increases in personal home loans, at 3%, 4.8% and 3.5% respectively.

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