New bank loans decline in China

BEIJING, June 12 (Reuters): Chinese banks extended 1.15 trillion yuan ($179.58 billion) in net new yuan loans in May, below analysts' expectations.

Analysts polled by Reuters had predicted new yuan loans of 1.2 trillion yuan, up slightly from April's 1.18 trillion yuan.

Broad M2 money supply grew 8.3 per cent in May from a year earlier, central bank data showed on Tuesday.

It missed forecasts for an expansion of 8.5 per cent and compared with 8.3 per cent in April.

Outstanding yuan loans grew 12.6 per cent from a year earlier, slower than an expected 12.7 per cent rise and compared with a rise of 12.7 per cent in April.

China's banks extended a record 13.53 trillion yuan in new loans last year, up 7.0 per cent from 2016. Government launched a drive to reduce risks in the financial system from a rapid build-up in debt.

The central bank's surprising cut in reserve requirement ratios (RRR) on April 17 and fears of a trade war have fanned market expectations of looser policy to support the economy.

But the central bank's recent net liquidity injection via its one-year medium-term lending facility (MLF) has prompted analysts to speculate delay in China's next possible RRR cut.

Meanwhile, China's yuan was flat against the U.S. dollar on Tuesday in thin trade, with market participants awaiting the outcome of a landmark Trump-Kim meeting.