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New loans may continue to fall in August

By Song Jingli (chinadaily.com.cn)
Updated: 2009-08-31 17:33

New lending from China Development Bank and China Construction Bank may continue to scale back in August, Securities Times reported today.

State-owned banks will lend less in August because of decreased demand from their main customers, State-owned companies. Joint-stock banks will also lend less in August, mainly because their capital adequacy ratio has fallen below the requested limit.

Related readings:  Banks report fewer new loans  New loans may reach 6.5t yuan in first half  New loans soar in Q1  New loans may have hit record 1.87 trillion yuan in March

A source with one State-owned bank attributed the decreased demand to State-owned companies' strict financial cost control and contracted investment plans.

A source with one Shenzhen-based State-owned company said that the company was unwilling to borrow when there was enough cash.

While State-owned banks are eager to lend for second-half-year profits, joint-stock banks have to worry about their low capital adequacy ratio while extending new loans.

Shanghai Pudong Development Bank has stopped lending in August. By the end of the first half year, the bank had lent 250 billion yuan ($36.7 billion) and its capital adequacy ratio had dropped to 8.11 percent, below the requested 10 percent.