China's yuan loans contract 100bn yuan in October, first drop in two months
New yuan loans in China fell by 100 billion yuan in October, the first decline in two months, according to Reuters calculations based on central bank data. Broad money supply (M2) grew at its slowest pace in over 18 months, while foreign exchange reserves fell for the fourth consecutive month.
New yuan-denominated loans in mainland China shrank by 100 billion yuan (US$13.8 billion) in October, marking the first monthly contraction in two months, according to Reuters calculations based on data from the People's Bank of China (PBOC). In the first ten months of the year, cumulative new yuan loans stood at 11.42 trillion yuan.
As of the end of October, the outstanding balance of yuan loans rose 4.7 per cent year-on-year. Broad money supply (M2) increased by 7.1 per cent from a year earlier, the slowest growth rate in more than one and a half years, the data showed.
Total social financing, a broader measure of credit in the economy, reached 469.16 trillion yuan by the end of October, up 7.2 per cent year-on-year. In the first ten months, cumulative incremental social financing amounted to 28.61 trillion yuan, 2.29 trillion yuan less than the same period last year. Reuters calculated that new social financing in October alone totalled 1.15 trillion yuan, below market expectations.
Separately, Reuters calculations based on PBOC data showed that the central bank's foreign exchange purchase balance—a proxy for the size of its foreign exchange reserves in yuan terms—stood at 21.72 trillion yuan at the end of October, a monthly decline of 2.002 billion yuan. This was the fourth consecutive month of decline.