China's new yuan loans hit 3-year high

New yuan loans soared to 1.07 trillion yuan ($170.4 billion) in January, up 334 billion yuan year on year, the People's Bank of China (PBOC) announced.

The amount was the highest since January 2010, when new yuan loans hit 1.39 trillion yuan.

The mild recovery of China's economy generated more demand for loans, said Lian Ping, chief economist at the Bank of Communications.

China's economy ended a seven-quarter slowdown and accelerated to a 7.9-percent year-on-year growth in the fourth quarter of 2012.

The launch of some projects was postponed to this year because of weak credit supply at the end of last year, also contributing to the sharp year-on-year increase, according to Lian.

New middle- and long-term loans reached 309.8 billion yuan in January, much higher than the 81.8-billion-yuan level of December 2012, which was the lowest monthly amount since 2009, the PBOC said in an online statement.

Besides, more ample deposits made it easier for banks to lend, Lian said.

Bank deposits added 1.11 trillion yuan in January, compared with a decline of about 790 billion yuan in the same period of last year.

Wang Tao, chief economist with UBS Securities, attributed the increase to soft credit demand a year earlier and the fact that last year's Spring Festival holiday came in January while this year's holiday falls in February, hence a lower base of comparison.

Chinese banks tend to ramp up lending at the start of the year in order to reap interest income earlier.

E Yongjian, a researcher at the Bank of Communications, predicted new loans would retreat in February because of the coming Spring Festival holiday.

Annual new yuan lending is likely to stand at 9-9.5 trillion yuan this year, he said. That will be up from last year's 8.2 trillion yuan.

New loans denominated in foreign currencies stood at 179.3 billion yuan in January, compared with a 14.8-billion-yuan decrease in foreign-currency loans in the same period of 2011, the central bank said.