(Yicai Global) Jun 22 – Consumer lending in China is expected to rise amid lower interest rates and a rebound in consumer spending, analysts said.
Chinese consumer demand continues to recover and manufacturers, retailers and financial institutions have high expectations, while some lenders are expected to continue cutting consumer loan rates, Economic Information Daily reported today, citing Zhou Maohua, macro researcher at Everbright Bank.
Short-term individual loans increased by CNY 369.6 billion (USD 55 billion) in May compared to April, as the Covid-19 pandemic subsided, consumption and residents’ business activities rebounded and that regulators have asked financial institutions to support industry players and business owners, Wang said. Qing, chief macroeconomic analyst at Golden Credit.
This year, the People’s Bank of China has twice cut the prime lending rate, a benchmark that guides lenders’ interest rates. On June 20, the LPR was 3.7%, down from 3.8% at the start of 2022.
The current interest rate on consumer loans from major banks is around 4%, significantly lower than last year’s average of 4.8%. Some banks have also introduced preferential policies. For example, China Merchants Bank announced that borrowers can enjoy a 22% discount from June 2 to June 16, so the annual interest rate is 3.95% at the lowest.
The trend has changed. Short-term loans to residents, including personal and business loans, rose 184 billion yuan ($27.4 billion) in May from April, according to data released by the PBOC. Consumer loans decreased by CNY 104.4 billion in April.
Editor: Emmi Laine, Xiao Yi