THE country’s credit growth slowed sharply in October, despite pressure by regulators on banks to help keep cash-starved companies afloat, pointing to further weakening in the economy in coming months.

Chinese banks extended 697 billion yuan (US$100.23 billion) in net new yuan loans in October, central bank data showed late Tuesday, much less than expected.

Analysts polled previously had predicted new loans of 862 billion yuan in October, down from 1.38 trillion yuan in September but well ahead of seasonal norms as lenders began to heed regulators’ calls to support smaller firms hit by the economic slowdown, especially those in the private sector.

However, Chinese banks are wary of a fresh spike in bad loans after years of pressure from regulators to reduce riskier lending.

Corporate loans tumbled to 150.3 billion yuan in October from 677.2 billion yuan a month earlier.

Household loans, mostly mortgages, fell to 563.6 billion yuan from 754.4 billion yuan in September.

Household loans accounted for 80.9 percent of total new loans in October, versus 54.7 percent in the preceding month, according to calculations based on central bank data.

While October is typically a slow month for Chinese credit, growth in key gauges such as total social financing and money supply fell to record lows, reinforcing views that policymakers will need to step up efforts to revive flagging investment.

In its financial stability report earlier this month, the central bank highlighted the sharp rise in household debt in recent years, noting it needed to be monitored. Analysts have warned the jump could undermine the government’s efforts to spur consumer spending.

Outstanding short-term consumer loans rose 37.9 year on year in 2017 and the total household debt to GDP ratio was at 49 percent at the end of last year, the central bank said in the report.(SD-Agencies)