The amount of new loans extended in February was said to be below 600 billion yuan, below market expectations, reports China Securities Journal, citing unnamed insiders.

According to an industry insider, the drop was due to the successive hikes in the required reserve ratios and the implementation of the differentiated reserve ratio requirements.

It was reported that Industrial and Commercial Bank of China (601398, 1398.HK), Agricultural Bank of China (601288, 1288.HK), Bank of China and China Construction Bank extended new loans of 55 billion yuan, 70 billion yuan, 47 billion yuan and 45 billion yuan, respectively.

An insider from a commercial bank said that the new loan scale in February will only be 50 percent of that in January.

According to the report, some of the small banks had to sell bonds in order to generate loans due to the rising reserve ratios and the unwillingness of large banks to provide financing.

An insider from a commercial bank said that banks had significantly reduced loans for the property sector since February.

China had hiked the reserve ratio five times, raised interest rates thrice and launched additional tightening policies on the property market since October.

source:CapitalVue