Chinese Analysts Forecast Robust Growth in Commercial Bank Lending in 2022

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Domestic analysts expect new lending by Chinese commercial banks in the first quarter of 2022 and beyond to post robust growth compared to last year, following recent signalling by China’s monetary and fiscal authorities.

Ming Ming (明明), deputy-head of CITIC Securities Research, said to state-owned media that a slew of recent policy moves and official pronouncements all pointed to stable growth in overall lending volumes in 2022.

“In future structural policy tools will continue to lend vigour to lending growth,” said Ming to Securities Daily.

“Additionally, given factors such as the decline in the loan prime rate, acceleration in mortgage lending, the large potential of new economy and green industry sector policies, and fiscal policy driving infrastructure development, there will be very large potential demand for lending and finance.

“We forecast that there will be marked strengthening of loan extension at the start of the year, and that there will be overall structural improvements compared to the past.”

Ming Ming forecasts that loans in the first month of 2022 could exceed the figure of 3.58 trillion yuan for the same period in 2021, and that first quarter new loans will be on track to surpass 8.5 trillion yuan, as compared to an increase in renminbi lending of 7.67 trillion yuan in the first quarter of last year.

Zhang Xu (张旭), chief fixed-income analyst with Everbright Securities, said that given reductions in the reserve ratio and the loan prime rate, as well as official targets for stabilisation of lending growth, China will continue to see “rational growth” in lending, with a marked concentration of credit extension in January that is in keeping with precedent.

Wang Gang (王刚), analyst with East Asia Qianhai Securities, expects new full year lending in 2022 to be slightly higher than in 2021, given the unleashing of long-term funds by reserve ratio cuts, as well as acceleration in efforts by Chinese banks to shore up their capital adequacy ratios.

Yuan Zheqi (袁喆奇), analyst with Ping An Securities, forecasts that loan extension in 2022 will hit 22 trillion yuan, for an increase of more than 2 trillion yuan compared to 2021.

“Since September 2021 the Chinese central bank has repeatedly stressed strengthening the stability of overall loan growth,” said Yuan.