Chinese banks are scaling back loans to each other in a sign that they are likely lending more to companies and households as they tend to do at the start of each year.
The interest rate Chinese banks paid to borrow from other banks using corporate paper as collateral climbed above 2.6% late last week, according to data from the Shanghai Commercial Paper Exchange. That rate fell to near zero levels last month as banks vied to lend money to each other to meet government quotas, and rising rates may indicate that financial institutions are now making more actual loans instead.
“The reason behind the rise is likely that banks have got sufficient loan projects at hand, so that they no longer need to swap the bills with each other at a loss to meet the lending quotas,” Sealand Securities Co. analysts led by Jin Yi wrote in a Monday note.
For loans based on banker’s acceptances maturing in one or three months, the interest rates rose to above 2.68% Thursday, the figures show, the highest since the end of June, according to data compiled by Changjiang Securities Co. For loans based on bills maturing in six months, the interest rate has rebounded to 2.67%, which is the highest since early July, according to Changjiang.
With the economy facing the challenges of a slumping housing market, sluggish consumption and increasingly widespread Covid outbreaks, China’s central bank has vowed greater support for growth. Over the past month the People’s Bank of China has cut the amount of cash banks need to keep in reserve, guided lenders to lower a benchmark lending rate, and regulators also called on banks to increase loans to the property sector in the first quarter to ease a liquidity crisis.
