Consumer and Property Lending Expected to Plunge in February Following Coronavirus Impacts

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Domestic analysts point to a “precipitous drop” in consumer and other forms of household lending following the impacts of the novel consumer virus on the Chinese economy.

Liao Zhiming (廖志明), chief banking sector analyst with Tianfeng Securities, said to 21st Century Business Herald that quarantine measures and sharp reductions in pedestrian traffic are bound to have a heavy impact on consumption and related credit extension.

“As a result of the impacts of the disease people are staying at home and not going out,” said Liao. “Consumption is in the doldrums, and credit card loans have markedly reduced.

“We forecast that in February household short-term loans will decline 350 billion yuan.

“In addition to this the disease is leading to a freeze in property sales, with commercial housing transaction numbers declining 68.9% year-on-year for 30 large and medium-sized cities in February, and falling 77% compared to January.

“[We] expect February household medium and long-term loan growth to be limited, and an increase of just 50 billion yuan.”

The general manager for a rural commercial bank in Fujian province said that the coronavirus had inflicted a heavy toll on the Chinese banking sector’s offline operations.

“Aside from a slight increase in online consumption, offline operations, including personal mortgages, consumer loans, and credit card consumption operations, are all unbearably poor,” said the source.

“The Spring Festival should be the peak season for the consumption of tourism, goods, transportation and food and accommodation, but due to the impacts of the novel coronavirus everyone has been at home from the end of January to the start of March.

“There have been no consumption scenarios, spending has declined, and banks are seeing a precipitous drop in personal consumer loans and credit transactions.”

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