China’s new RMB loans rebounded to RMB708.9 billion in November, compared with RMB513.6 billion recorded in October.
Aside from seasonal factors driving up new loans, the rebound was weaker than expected and lower than the RMB852.7 billion in November 2014, indicating that domestic demand remained soft and banks were cautious to provide new loans amid rising credit risks.
China’s total social financing aggregate also bounced to RMB1.02 trillion in November, up from RMB476.7 billion in October, but still lower than RMB1.14 trillion in November 2014.
Off-balance sheet financing, including banker’s acceptance drafts, trust loans and entrusted loans, continued to decline.
In the first 11 months of the year, new loans were 77.8% of aggregate financing, compared with 59% in 2014, reflecting the drop in off-balance sheet activities.
China’s M2 rose by 13.7% year-on-year in November, from 13.5% in October, above the official target of 12% for 2015.
"As deflationary pressure persists and capital outflow continues, we expect the People’s Bank of China to cut the bank reserve requirement ratio (RRR) by 50 basis points in the remainder of December and a total of 200 basis points in 2016 to maintain adequate liquidity and support growth," says an ANZ report.