New RMB loan surprisingly reached RMB 870.8 billion in May, 201.4 billion higher than a year before, according to data released by the People’s Bank of China.
The figure beats the market consensus of RMB750.0 billion.
The total social financing fell to RMB1.40 trillion in May from RMB1.55 trillion in April, in line with market expectations. The broad M2 money supply grew 13.4% on a year-on-year basis.
"China’s new credit extension came in higher than expected, possibly because the policy banks accelerated the loan extension to the shanty town renovation work," writes Liu Ligang, an economist at ANZ Research.
"The targeted required reserve ratio cut may increase bank lending somewhat," he adds, "although the contribution should be insignificant given the affected banks are small in terms of asset size."