Senior figures from China’s big four banks have flagged a marked easing in residential property loans this year after the sector went on a spree in 2016.
Based on data from the latest round of annual reports, almost all of China’s listed banks significantly expanded residential loans in 2016, with some even doubling the the volume of lending in this area.
New mortgage lending comprise as much as 60% of all new lending, as compared to 2015 when they were just 30%.
China’s big four banks expanded personal residential loans by a total of 2.76 trillion yuan last year, for an average increase of roughly 30%.
Joint-stock banks were far more profligate in their issuance of personal home loans. Minsheng Bank took the lead in lending to homeowners, increasing its residential loans by 158.8% to reach 295.2 billion yuan.
Residential lending was primarily concentrated in third and fourth-tier cities.
Senior figures from the big four banks have indicated that they will dial-down the volume of personal home loans this year in response to government policies to clamp down on the property market.
Gu Shu, the head of ICBC, said that China’s biggest bank would “put the brakes” on growth in personal home loans this year, while Guo Ningning, the vice-head of the Agricultural Bank of China, said that this year the lender would “control loan demand for speculative home purchases” and that “new personal home mortgages will not exceed last year.”
The China Construction Bank has also indicated that the pace of growth in home loans will not exceed the increase seen last year.
Big four executives also flagged an expansion in lending to businesses to pick up for a tightening in property loans.
Gu Shu said that while ICBC will continue to satisfy rational demand for personal home loans, more lending would be directed towards companies.
According to Zeng Gang, chairman of the banking research office of the China Academy of Social Sciences, a rising interest rate environment would favour the diversion of bank loans towards companies.
Official data from the People’s Bank of China shows that non-financial enterprise increased by 1.56 trillion yuan in January and 731.4 billion yuan in February.
