(Yicai) March 16 -- China’s yuan-denominated loans rose by CNY5.61 trillion (USD815 billion) in the first two months of this year, as robust lending to corporations offset soft household borrowing.

Loans to enterprises and public institutions rose by CNY5.94 trillion in the two months ended Feb. 28 from a year earlier, CNY120 billion (USD17.4 billion) more than a year ago, according to data released by the People’s Bank of China on March 13. Of that, short-term lending climbed by CNY2.65 trillion and medium- and long-term lending jumped by CNY4.07 trillion.

Household loans fell by CNY194.2 billion, compared with an increase of CNY54.7 billion (USD7.9 billion) in the same period of last year and an average of CNY303.1 billion over the past three years. Of that, short-term lending plunged by CNY359.6 billion, and medium- and long-term lending rose by CNY165.4 billion.

Almost all new lending was medium- and long-term corporate loans, reflecting the confidence and willingness of businesses to invest, said Zhang Xu, chief fixed income analyst at Everbright Securities.

This accounted for 99 percent of new yuan loans last month, compared with 54 percent in the same period of last year. A higher share of such loans in total new lending generally signals stronger credit quality, Zhang noted.

The solid performance of medium- and long-term corporate loans may reflect accelerated project advancement earlier in the year and the effectiveness of policy-based financial tools, said Zhou Guannan, chief fixed income analyst at Huachuang Securities.

Weak household borrowing, meanwhile, partly reflects seasonal factors, said Tan Yiming, chief fixed income analyst at Tianfeng Securities. Chinese New Year is typically a low season for property deals, he said, adding that an eye needs to be kept on the recovery of the willingness among households to borrow more.

The Chinese New Year holiday, or the Spring Festival as it is known in China, landed squarely in February this year, whereas it stretched across late January and early February last year.

Household Loans

Weak expectations around incomes and the slow stabilization of the property market are the main reasons for soft household borrowing, said Wang Yunjin, senior researcher at the Zhixin Investment Research Institute. In February, search activity for new homes across 60 major cities rose 1.2 percent from January, but remained 20 percent lower than a year earlier.

Even though the housing market in 30 cities saw a modest buying recovery as people returned to their hometowns for the holiday, the average selling price dropped month on month, as market confidence has not yet fully recovered, according to Wang.

Meanwhile, consumption rebounded slowly after the Spring Festival, and delays in implementing consumer goods subsidy policies have kept demand for consumer borrowing subdued, Wang noted.

Real estate sales have entered the usual “Little Spring” seasonal peak, when both transaction volumes and prices typically improve compared with February, said Wang Yifeng, deputy director of the research institute of Everbright Securities.

Shanghai brought out new housing real estate policies after the holiday, easing purchase restrictions and boosting market expectations. These are expected to release pent-up demand for both first-time buyers and home upgrades.

Combined with the seasonal uptick and supportive policies in some regions, the housing market may see a modest recovery this month, which could provide some support for mortgage lending, Wang Yifeng predicted.

Editor: Futura Costaglione