NEW bank loans in China likely picked up modestly in May after slowing the previous month as the central bank tries to spur faster credit growth.

Chinese banks are expected to have extended 1.225 trillion yuan (US$32.55 billion) in net new yuan loans in May, up from 1.02 trillion yuan in April and above 1.15 trillion yuan in the same month last year, a median estimate in a recent survey of 20 economists showed.

The International Monetary Fund last week cut its 2019 economic growth forecast for China to 6.2 percent on heightened uncertainty around trade frictions, saying that more monetary policy easing would be warranted if the trade war intensifies.

Earlier last month, the People’s Bank of China (PBOC) announced a cut in three phases in the reserve requirement ratio for regional banks in a further bid to reduce small companies’ financing costs. The PBOC has now delivered six RRR cuts since early 2018, lowering the ratio to 13.5 percent for big banks and 11.5 percent for small and medium-sized lenders.

Outstanding yuan loan growth on a year-on-year basis likely held steady at 13.5 percent from April, and broad M2 money supply was seen rising fractionally to 8.6 percent year on year, from 8.5 percent in April, the poll showed.

TSF, a broad measure of credit and liquidity in the economy, was estimated to have picked up to 1.41 trillion yuan in May from 1.36 trillion in the previous month.

TSF includes off-balance sheet forms of financing that exist outside the conventional bank lending system, such as initial public offerings, loans from trust companies and bond sales.

The central bank injected the most cash into the banking system in four months at the end of May to stabilize money markets after the government seized control of Baoshang Bank.

(SD-Agencies)