BANKS in China extended 1.06 trillion yuan (US$150.06 billion) in new yuan loans in July, down from June and falling short of analysts’ expectations, central bank data showed Monday.

Analysts polled previously had predicted new yuan loans would fall to 1.25 trillion yuan in July, from 1.66 trillion yuan in the previous month.

Growth of money supply and total social financing also slowed, raising pressure on the central bank to ease policy further to support the slowing economy.

The drop in new loans was likely exacerbated by seasonal factors.

Chinese banks usually make fewer loans in July after ramping up lending in June, but the data was lower than the tally in July 2018, when banks doled out 1.45 trillion yuan in new loans.

Household loans, mostly mortgages, fell to 511.2 billion yuan in July from 671.7 billion yuan in June, while corporate loans tumbled to 297.4 billion yuan from 910.5 billion yuan.

Broad M2 money supply in July grew 8.1 percent from a year earlier, central bank data showed, below estimates of 8.4 percent seen in the poll. It rose 8.5 percent in June.

Outstanding yuan loan grew 12.6 percent from a year earlier. Analysts had expected 12.8 percent growth, slower than June’s 13 percent.

Growth of outstanding total social financing (TSF), a broad measure of credit and liquidity in the economy, slowed to 10.7 percent in July from a year earlier and from 10.9 percent in June.

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.

In July, TSF fell to 1.01 trillion yuan from 2.26 trillion yuan in June. Analysts polled had expected 1.5 trillion yuan.

To free up more funds for lending and accommodate local government project financing, most analysts still expect the central bank will cut banks’ reserve requirement ratios further in coming months, on top of six reductions since early 2018.

The central bank has pledged to improve its policy transmission mechanism to support small and private firms.

The weighted average lending rate for companies and home buyers fell 3 basis points in the second quarter to 5.66 percent, after a rise of 5 basis points in the first quarter, the central bank said Friday.(SD-Agencies)