SHANGHAI (AFP) - China's bank lending retreated in August, the central bank said on Friday, after a sharp rise in July when the government directed funds into the stock market.
Domestic banks extended new loans of 809.6 billion yuan, down from a massive 1.48 trillion yuan in July, the People's Bank of China said.
But total social financing - an alternative measure of credit in the real economy - reached 1.08 trillion yuan last month, rising strongly from 718.8 billion yuan in July and slightly exceeding a consensus forecast of 1.0 trillion yuan, according to Bloomberg News.
"Credit growth is staying on track despite the stock market volatility," Larry Hu, Hong Kong-based head of China economics at Macquarie Securities, told Bloomberg.
"We're going to see a pickup in the fourth quarter (economic growth)."
In August, China cut interest rates for the fifth time since November and reduced the reserve requirement ratio - the amount of money banks must hold in reserve - for the fourth time.
But Chinese growth has slowed further this year, to 7 per cent in each of the first two quarters, after 2014 expansion hit a 24-year low of 7.3 per cent.
Analysts believe Beijing will further ease its monetary policy to keep the economy on track.
ANZ Banking Group said in a research report after the lending data was released that a 50 basis point reduction in reserve requirements for banks was expected in the fourth quarter, in addition to ongoing open market operations, to encourage bank lending and maintain ample liquidity.