China's new bank loans in June rise less than expected

Chinese banks extended 1.61 trillion yuan (HK$1.86 trillion) in new loans in June, more than triple the amount in May but missing analysts' forecasts, according to Reuters calculations using central bank data on Wednesday.

Analysts polled by Reuters had expected new yuan loans in June would reach 2 trillion yuan, compared with 520 billion yuan in May and 2.24 trillion yuan a year earlier.

The People's Bank of China does not release monthly breakdowns. Reuters calculated the June figure using the central bank's January to June data, compared with the January to May figure.

New yuan loans totalled 10.72 trillion yuan for the first half of this year, the PBOC data showed, down from 12.92 trillion yuan in the same period in 2025 as a prolonged property slump and soft business investment appetite continued to weigh on credit growth.

Household loans, including mortgages, grew by 264.6 billion yuan last month after declining by 141.2 billion yuan in May, while corporate loans rose to 1.5 trillion yuan from 640 billion yuan, according to Reuters' calculations.

Outstanding yuan loans grew 5.2 percent in June from a year earlier, slower than the 5.5 percent pace in May and compared with analysts' forecasts of 5.4 percent.

China is shifting from bank lending to direct financing via bonds and equities, with credit increasingly moving from property to high-tech manufacturing.

PBOC Governor Pan Gongsheng last month characterised the credit growth slowdown as part of a structural shift in the economy, but persistent weakness in loan expansion has prompted it to issue window guidance to banks to step up lending in recent months.

The central bank has so far refrained from cutting policy rates or banks' reserve requirement ratios (RRR) since May 2025. It pledged at a meeting this month to maintain an appropriately loose monetary policy and to keep liquidity ample.

Broad M2 money supply grew 8 percent from a year earlier in June, PBOC data showed, missing analysts' forecast of 8.5 percent, and down from 8.6 percent in May. The narrower M1 measure rose 4 percent year-on-year, a decline from 5.5 percent in May.

Outstanding total social financing (TSF) - a broad measure of credit and liquidity - rose by 7.4 percent in June from a year earlier, down from 7.7 percent growth in May. Any acceleration in government bond issuance could boost such financing.

China's economy expanded at its slowest pace in over three years in the second quarter at 4.3 percent, with weak household consumption clouding strong manufacturing and exports and intensifying concerns over the long-term sustainability of its unbalanced growth model.

Reuters

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