China says new bank lending in April at $87 billion, down sharply from March

China’s new bank lending slows in April

SHANGHAI — Chinese banks issued new loans worth 591.8 billion yuan ($87 billion) in April, less than a third of the previous month’s total, the central bank said Monday, as lenders slowed the flow of credit aimed at stimulating the economy.

The figure announced by the People’s Bank of China was up 27 percent from the same month a year earlier but slightly below forecasts, in recent state media reports, for about 600 billion yuan ($88 billion) in new lending in April.

The sharp drop was expected after banks accelerated lending in the first quarter of the year to support a 4 trillion yuan ($586 billion) stimulus package.

“The decline from the elevated levels in the first quarter reflects the natural tendency of banks to front-load new loans at the beginning of the year,” Jing Ulrich, chairwoman for China equities at J.P.Morgan, said Monday in a note to clients.

Lending soared to 4.58 trillion yuan ($670 billion) in the first three months of the year, peaking at a record 1.9 trillion yuan ($278 billion) in March.

The central bank has pledged to keep its monetary policy loose to ensure ample credit in coming months. But in its first-quarter report, issued last week, it did note growing concern over the quality of new lending.

The potential for excess investment in redundant projects has raised worries over the risks of a surge in bad debt and factory overcapacity.

“Commercial banks seem to be caught between a rock and a hard place. The central bank has asked for more lending and also better credit quality,” Sherman Chan, an economist for Moody’s Economy.com, said in a report issued last week.