CHINESE banks made 707.9 billion yuan (US$114.1 billion) worth of new loans in April, much less than expected, as slowing earnings growth and rising bad loans made lenders more cautious despite government calls to help support the economy.

    Economists polled by Reuters had expected new local-currency loans of 903 billion yuan in April, compared with 1.18 trillion yuan in March.

    Broad M2 money supply (M2) rose 10.1 percent from a year ago, missing market expectations of 11.9 percent and slowing from March’s 11.6 percent pace, the People’s Bank of China (PBOC) said yesterday.

    M2 growth was the lowest since records began in 1998.

    Outstanding loan growth was 14.1 percent in April.

    Total social financing (TSF), a broader measure of overall liquidity in the economy, was 1.05 trillion in April, compared with 1.18 trillion yuan in March and 1.35 trillion yuan in February.

    Worried about China’s economy the People’s Bank of China bank has stepped up support measures.

    But banking sources have told Reuters that some lenders are not passing on lowering borrowing costs to customers, undermining official efforts to boost the economy.

    For their part, companies complain they are short of customers, not credit, and thinning profit margins are making it more difficult to pay off existing debt.

    Banks looking for good returns may be more interested in investing in China’s red-hot stock market.

    The central bank’s struggle to bring down short-term money rates in the interbank market finally began yielding results in April, with the benchmark seven-day bond repurchase agreement falling below 3 percent for the first time since October 2014.

    But the economy still faces persistent pressure due to a property market downturn, widespread factory overcapacity, high levels of local government debt and erratic global demand for China’s exports.(SD-Agencies)