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Chinese banks aim to slow lending pace: report
Shanghai (AFP) July 29, 2009 Two top Chinese banks have set ceilings for new loans this year to rein in a spate of aggressive lending, as regulators raised concerns over credit risks, domestic media reported. Industrial and Commercial Bank of China (ICBC) aims to issue one trillion yuan (146 billion dollars) this year while smaller rival China Construction Bank has set a target of 900 billion yuan, the Caijing magazine reported on its website Tuesday, citing unnamed banking sources. The ceiling on new loans is "to prevent potential deterioration in assets quality due to unusual lending growth", an unnamed official with China Construction Bank was quoted as saying. If put in place, the full-year lending ceilings would imply the two banks have already issued around 80 percent of their total lending for the year. ICBC and China Construction Bank extended 825.5 billion yuan and 709 billion yuan in new loans in the first half of the year respectively, according to the report. New yuan loans issued by Chinese banks hit a record 7.4 trillion yuan in the first half, raising concerns that some loans have been funnelled into the stock and property markets. The country's stock market has surged more than 80 percent this year and home purchases in major cities hit record highs in recent months. The reported lending targets come after regulators in recent weeks urged banks to take a hard look at their lending risks and ensure that the loans are being put to use in the real economy. China Banking Regulatory Commission warned on Friday many banks had not performed sufficient risk management and pledged to strengthen supervision. Beijing has taken aggressive steps including a "moderately loose" monetary policy and massive fiscal stimulus package since late last year to pull the world's third-largest economy out of its worst slump in years. However, economists have said the rebound in growth, which rose to 7.9 percent in the second quarter from 6.1 percent in the first, was largely underpinned by unprecedented lending expansion. Share This Article With Planet Earth
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