China banks lend 740 bln yuan in Dec: report

(Agencies)
Updated: 2009-01-12 18:12

China's banks granted a whopping 740 billion yuan in new local-currency loans in December, posting a biggest monthly increase since January, the Shanghai Securities News reported on Monday.

A man walks past a logo of Industrial and Commercial Bank of China in front of its local branch in Shanghai October 27, 2006. China's banks granted a whopping 740 billion yuan in new local-currency loans in December, posting the biggest monthly increase since January. [Agencies]

The surge, up from 476.9 billion yuan in November and just 48.5 billion yuan in December 2007, shows that banks heeded the government's call to ramp up lending as part of its strategy for stimulating the economy, the official paper said.

As a result of the burst of lending last month, outstanding yuan loans at the end of 2008 exceeded 30 trillion yuan, up 19 percent from a year earlier, the paper said.

Citing unidentified authoritative sources, the Shanghai Securities News said new yuan loans in 2008 totalled 4.88 trillion yuan, up from 3.63 trillion yuan in 2007.

Loan growth in December 2007 was particularly weak because the central bank had clamped down hard on credit in an effort to slow investment growth and cap inflation.

The reported increase in December would be second only to the jump of 803.6 billion yuan in January when banks rushed to book new loans to take advantage of the opening of new lending quotas.

To support the government's efforts to boost the flagging economy, the central bank scrapped lending limits in early November and has cut interest rates five times since mid-September.

It has also lowered banks' required reserves four times over the same period to encourage banks to help finance a two-year, 4 trillion yuan stimulus package aimed at bolstering growth dented by the global financial crisis.