Lending by China's biggest banks falls for first time since 2009

People walk past a branch of Industrial & Commercial Bank of China Ltd. (ICBC) in the Tianhe district of Guangzhou.
People walk past a branch of Industrial & Commercial Bank of China Ltd. (ICBC) in the Tianhe district of Guangzhou. PHOTO: BLOOMBERG

HONG KONG (BLOOMBERG) - The loans outstanding of China's four biggest banks declined for the first time since at least 2009, adding to warning signs for a tepid economy.

Total loans by the four lenders, including Industrial & Commercial Bank of China, amounted to 35.7 trillion yuan (S$7.94 trillion) at the end of October, down 65.6 billion yuan from a month earlier. That's according to data released on Sunday by the People's Bank of China.

"Credit growth is slowing because they are cautious about the economic outlook and asset quality," said Chen Shujin, an analyst at DBS Vickers Hong Kong. The banks may also have slowed lending because they're close to meeting full-year loan targets, the analyst said.

Chinese banks' troubled loans increased to almost 4 trillion yuan by the end of September, according to data released on Thursday night by the China Banking Regulatory Commission. Their profit growth slumped to 2 per cent in the first nine months from 13 per cent a year earlier.

Nonperforming loans stood at 1.59 per cent of outstanding credit, or 1.2 trillion yuan, according to the CBRC data. That rises to 5.4 per cent, or 3.99 trillion yuan, if "special mention" loans, where repayment is at risk, are also included.