China's November new loans miss forecast as housing slump persists

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November new loans at 390 bln yuan, vs forecast 500 bln yuan

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New loans dragged down by weak household borrowing

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November outstanding yuan loan growth at record low

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Chinese leaders pledge more stimulus next year

By Shi Bu and Kevin Yao

BEIJING, Dec 12 (Reuters) -

China's new bank loans rose less than expected in November, weighed down by a sharp slowdown in household borrowing amid a prolonged property slump, as policymakers pledged more stimulus next year. Chinese banks extended 390 billion yuan ($55 billion) in new loans in November, up from 220 billion yuan in October, according to Reuters calculations based on data from the People's Bank of China (PBOC) on Friday.

The figure was below the 500 billion yuan expected by analysts polled by Reuters and lower than the 580 billion recorded a year earlier.

"The PBOC has argued that weak loan growth reflects factors like local government debt swaps, loan write-offs and shifts towards other forms of financing rather than lacklustre private demand, but the weakness in lending to households suggests that slowing mortgage demand is also a key drag," Capital Economics said in a note.

"And loan demand is likely to stay subdued, with deflation likely to keep real lending rates elevated even accounting for the incremental policy rate cuts we are forecasting," it added.

China's property sector has been reeling since tighter regulations led to a 2021 liquidity crunch for real estate developers, many of which have since defaulted on debt.

China's

home prices

are forecast to decline 3.7% this year, broadly in line with the previous poll, and to continue falling through 2026 before stabilising in 2027, the latest quarterly Reuters survey showed.

China's central bank does not provide monthly breakdowns. Reuters calculated the November figure based on the bank's January-to-November data and compared it with the January-to-October figure.

Household loans, including mortgages, shrank by 206.3 billion yuan in November after a contraction of 360 billion yuan in October, while corporate loans climbed to 610 billion yuan from 350 billion yuan, according to Reuters calculations. The government introduced a 500-billion-yuan policy-based financial programme in September to supplement project capital. Chinese officials said the instrument was fully deployed in late October to finance more than 2,300 projects with a total investment of around 7 trillion yuan. But businesses and consumers remained wary about taking on more debt due to economic uncertainty, weak confidence and ongoing property sector troubles, despite a temporary China-U.S. trade truce and government calls to boost consumption.

BEIJING PLEDGES MORE STIMULUS

Chinese leaders promised on Thursday to maintain a "proactive" fiscal policy next year and flexibly use monetary tools, including cuts to banks' reserve requirement ratios and interest rates, to bolster economic growth, which analysts expect Beijing to target at roughly 5%. New yuan loans stood at 15.36 trillion yuan for the first 11 months of this year, PBOC data showed, lower than the 17.1 trillion yuan that was recorded a year earlier. Outstanding loans rose 6.4% in November from a year earlier, a record low and down from October's 6.5%. Economists had expected growth of 6.5%, the same pace as in October. With policymakers appearing cautious about rolling out a near-term stimulus programme this year, a top leadership meeting this week offered few surprises, stressing the "leading role" of domestic demand in 2026, but signalling no new support measures. Broad M2 money supply grew 8.0% in November from a year earlier, the central bank data showed, below analysts' expectations of 8.2% in a Reuters poll. The narrower M1 money supply climbed 4.9% from a year earlier, compared with 6.2% in October, PBOC data showed. Outstanding total social financing (TSF), a broad measure of credit and liquidity in the economy, rose 8.5% from a year earlier in November, unchanged from a month earlier.

TSF includes off-balance-sheet forms of financing outside of the conventional bank lending system, such as initial public offerings, loans from trust companies and bond sales.

($1 = 7.0548 Chinese yuan renminbi) (Reporting by Shi Bu and Kevin Yao. Editing by Thomas Derpinghaus, Kate Mayberry and Andrew Heavens)