New loans at Chinese big 4 banks almost zero so far in May16 May, 2012, 12:28. Posted by Zarathustra
We saw that last month’s figure for new loans was absolutely mediocre. It turns out that the new loans numbers could continue to be mediocre, if not worse, in May.
Sina is reporting that the big 4 banks’ (ICBC, China Construction Bank, Agricultural Bank of China, Bank of China) new loan for May is almost zero for the first two weeks. According to their sources, two of the big 4 banks have had new loans of RMB10 billion and a few billion, while another banks have net new loans in negative territory, brining the overall net new loans for big 4 banks more or less at zero. This suggests that demand for credit is extremely weak, perhaps much weaker than anyone could have thought.
Meanwhile, big 4 banks are losing RMB200 billion of deposits according to the report. One of these banks lost RMB90 billion of deposit alone.
The chart below shows the latest official data from the PBOC up to April. If new loans for May turn out to be as disappointing as this report suggests, that will not bode well for the money supply growth, which has been below what the government wants.
Source: People’s Bank of China
Earlier, I have already mentioned that capital flow turned negative once again in April, which is negative for the monetary condition. Meanwhile, I have started to speculate that a debt deflation has likely begun in China. This latest report on zero new loans and disappearing deposits add to the evidence that debt deflation could have been started.