PBOC explains fast loan growth in 1Q
(Xinhua)
Updated: 2006-05-15 06:53 The People's Bank of China
(PBOC) gave four reasons Sunday to explain the fast growth of bank loans in the
first quarter of this year.
At the end of the first quarter, China reported total loans of 20.6 trillion
yuan (US$2.575 Trillion), up 14.7 percent over the previous year. The increase
rate is 1.7 percentage points over the same period last year.
In the first quarter, domestic banks fulfilled roughly half of their lending
targets for the whole year, adding 1.26 trillion yuan (about US$156.25 billion)
in loans, up 13.98 percent from a year ago.
"Fast economic and fixed-assets-investment growth brought a strong demand for
bank loans," said the spokesman.
China's economy, fueled by strong investment, soared by a
higher-than-expected 10.2 percent in the first quarter despite macro-control
measures.
The foreign trade surplus also continued to grow in the first three months
and the increasing foreign exchange reserves meant more currency supply for
banks to lend loans, he said. Statistics showed that the trade surplus reached
US$23.3 billion in the first quarter.
Another reason for the fast loan growth was that commercial banks were
seeking for greater profits through lending more money to businesses.
Commercial banks chose to lend loans earlier in the year than before in a bid
to gain profits earlier, resulting in the rapid fulfillment of lending targets
in the first quarter, explained the spokesman.
The loan growth rate has been higher in the first half year than in the
second half since 2003, he added.
In order to cool the soaring economy through loan control, the central bank
announced on April 28 a rise in the 12-month loan rate from 5.58 percent to 5.85
percent.
The PBOC would rigidly control bank loans to industries with overheated
investment and lend more money in support of weak links in the economy, the
spokesman said.
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