By Shi Bu and Kevin Yao
BEIJING, March 13 (Reuters) – New bank lending in China slumped far more than expected in February, retreating sharply from a seasonally strong start to the year as weak credit appetite continued to drag on borrowing in the world’s second‑largest economy.
China’s banks extended 900 billion yuan ($130 billion) in new yuan loans in February, plunging from 4.71 trillion yuan in January and missing analysts’ forecasts, according to Reuters calculations based on data released by the People’s Bank of China (PBOC).
Analysts polled by Reuters had expected new yuan loans would stand at 979 billion yuan last month.
Credit typically slides in February as banks front-load lending at the start of the year and China’s longest nine-day Lunar New Year holiday last month also reduced business activity and loan demand.
February’s lending was also below the 1.01 trillion yuan recorded a year earlier, underscoring persistently weak borrowing appetite amid a prolonged property slump and cautious corporate sentiment.
The PBOC does not provide monthly breakdowns. Reuters calculated the February figure based on the bank’s January-February data released on Friday, compared with the January figure.
Outstanding yuan loans grew 6.0% in February from a year earlier – a record low and slower than 6.1% in January. Analysts had expected 6.0% growth.
The record‑low loan growth was driven largely by the continued slump in household borrowing, Capital Economics said in a note.
“The government’s interest subsidies for consumer loans have clearly done little to support loan demand – bank loans to households expanded by just 0.1% y/y in February. But lending to corporates did pick up a touch though, suggesting that the recent cuts to the PBOC’s relending facility rates may have supported corporate demand at the margin,” it said.
Household loans, including mortgages, shrank by 650.7 billion yuan in February after a 456.5 billion yuan rise in January, while corporate loans fell to 1.49 trillion yuan from 4.45 trillion yuan, according to Reuters’ calculations.
Last week, PBOC governor Pan Gongsheng said China will continue implementing a moderately loose monetary policy this year and use monetary policy tools such as cuts to the reserve requirement ratio and interest rates flexibly to support growth.
“Given rising concerns about inflation, the likelihood of a reserve‑requirement ratio (RRR) cut or interest‑rate cut in the near term has diminished, and policy support will likely need to come from the fiscal side instead,” said Zhou Hao, chief economist at Guotai Junan International.
Beijing has unveiled a slightly lower economic growth target of 4.5%-5% for 2026, down from last year’s 5%, and has pledged to boost domestic demand, particularly consumption, while pushing overall price levels into positive territory this year.
Beijing has pledged to prioritise expanding domestic demand and ramp up support for high-tech sectors, while announcing plans to inject 300 billion yuan into major state banks this year to boost lending capacity and guard against financial risks.
China will earmark 250 billion yuan in ultra-long special treasury bonds for consumer goods trade-in programs in 2026 and has announced a 100 billion yuan fiscal-financial coordination fund to spur domestic demand.
Broad M2 money supply grew 9.0% from a year earlier in February, PBOC data showed, above analysts’ 8.8% forecast in the Reuters poll. In January, M2 grew 9%.
The narrower M1 money supply grew 5.9% in February from a year earlier, from 4.9% in January.
Outstanding total social financing (TSF) – a broad measure of credit and liquidity – rose 8.2% in February from a year earlier, unchanged from 8.2% in January. Any acceleration in government bond issuance could boost such financing.
(Reporting by Shi Bu and Kevin Yao; Editing by Toby Chopra)
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