Lending jump expected for June

Many Chinese institutions have forecast new yuan-denominated loans will hit 1 trillion yuan (159 billion U.S. dollars) in June, as the nation steps up stimulus measures to spur credit demand.

Lian Ping, chief economist at the Bank of Communications, said new loans in June will be close to 1 trillion yuan, citing rising borrowing demand driven by sped-up approvals for infrastructure projects, expanding construction of low-income housing, and an export rebound last month.

He also expected credit to increase based on a stronger lending impulse and capacity after banks' interest margin narrows and deposits increased.

Moreover, commercial banks usually issue massive loans toward the end of each quarter in order to achieve credit targets in the period, which will also push up new loans, said Guo Tianyong, a professor from the Central University of Finance and Economics.

However, most analysts viewed the anticipated credit jump as a result of government boosting measures, warning of a still-weak credit demand.

Enterprises are still in a de-stocking cycle, and the market demand will remain low over the coming months, according to a report by China International Capital Corp..

The real credit expansion pace may be slower than the market has expected, because banks are likely to take discounted bills into their balance sheet, which will distort the credit figure, it said.

Another report issued by the People's Bank of China, or the central bank, showed that the loan demand index dropped to 70.8 percent in the second quarter of 2012, the lowest since 2009, indicating weak investment confidence among enterprises amid economic slowdown.

With first-quarter GDP growth hitting an almost three-year low of 8.1 percent, China has moved to make its polices more pro-growth after spending two years working to tame inflation.

Official data showed that China's new yuan-denominated loans expanded to 793.2 billion yuan in May from 681.8 billion yuan in April.