BANKS in China made the most new loans on record in January — totaling 3.23 trillion yuan (US$477 billion) — as policymakers try to jumpstart sluggish investment and prevent a sharper slowdown in the world’s second-largest economy.

Chinese banks tend to front-load loans early in the year to get higher-quality customers and win market share. But they have also faced months of pressure from regulators to step up lending, particularly to cash-starved smaller firms.

Net new yuan lending last month was far more than expected, and eclipsed the last high of 2.9 trillion yuan in January 2018.

Analysts polled previously had predicted new loans of 2.8 trillion yuan, more than double the level seen in December.

“While we wouldn’t pin too much on a single month’s data, the latest pickup in credit could be a sign that credit growth is starting to bottom out in response to monetary policy easing,” Julian Evans-Pritchard, senior China economist at Capital Economics, said in a note.

“A recovery in lending, if sustained in coming months, would be consistent with our expectation for growth to stabilize in the second half of this year,” he said, noting it usually took six to nine months before new loans translated into business activity.

Sources said last week that the central bank had urged banks to moderate lending in January to manage the amount of money flowing into the economy, spurring talk that the tally would be even more robust than first thought.

Demand for credit picked up sharply in the corporate sector, followed by the household sector, according to data released by the People’s Bank of China on Friday.

Corporate loans jumped to 2.58 trillion yuan from 473.3 billion yuan in December, while household loans rose to 989.8 billion yuan from 450.4 billion yuan, according to calculations based on the official data.

Corporate loans accounted for 80 percent of new loans in January, up sharply from 44 percent in December.

The central bank has not opened the credit floodgate, and the record January lending showed monetary policy had become more effective, a central bank official said, in a bid to allay concerns about more debt build-up.

To free up more funds for lending, the central bank has cut the amount that banks need to set aside as reserves five times over the past year.

Most analysts do not expect the central bank to cut benchmark interest rates soon.

(SD-Agencies)