Chinese banks made net new loans of 1.11 trillion yuan in the month of May, exceeding both analysts expectations and the reading for April.
A survey of analysts by Reuters expected new yuan lending of 900 billion yuan, as compared to 1.1 trillion yuan for April.
While new lending surpassed analysts expectations, M2 money supply growth in May fell short of a consensus forecast of 10.4%, with data from People’s Bank of China indicating year-on-year growth of 9.6%.
Outstanding yuan loans were up 12.9% by the end of May on an annual basis, holding steady with the growth reading for April and edging just above the consensus forecast of 12.8%.
The robust growth in Chinese lending last month may come as a shock to many observers, given the ongoing deleveraging campaign led by PBOC and the China Banking Regulatory Commission, as well as complaints about tightening of liquidity amidst rising interbank lending rates.
In 2016 Chinese banks indulged in a credit binge at the behest of the central government as part of efforts to stimulate economic growth, providing a record-breaking 12.65 billion in loans.