China's New Bank Loans Rebound to 1.08 Trillion Yuan in Sept

Chinese banks stepped up lending sharply in September, extending 1.08 trillion yuan (about US$161 billion) in new yuan loans, well above market expectations, Reuters reported, citing its own calculations from People’s Bank of China (PBOC) data. The figure beat the 975 billion yuan forecast in a Reuters poll and marked a steep rebound from just 60 billion yuan in August, though it remained below the 1.29 trillion yuan recorded a year earlier.

The jump was driven almost entirely by companies. Corporate loans rose to 1.29 trillion yuan from 260 billion yuan in August, while household borrowing was flat after shrinking by 202.9 billion yuan the previous month, according to the Reuters figures. Banks traditionally accelerate lending towards the end of each quarter to meet targets, and late-September policy support added to the seasonal lift.

Broader credit still weak

Beneath the headline beat, the wider credit picture stayed soft. Outstanding yuan loans grew 4.8% from a year earlier, a record low and down from 4.9% in August. Broad M2 money supply growth slowed to 7.2%, an 18-month low and short of the 7.4% analysts had expected, while narrow M1 growth eased to 3.2% from 4.1%.

Growth in outstanding total social financing, a broad gauge of credit and liquidity in the economy, edged down to 7.1% from 7.2%. Caixin reported that the monthly flow of total social financing reached 3.55 trillion yuan in September, supported by government bond issuance, and said new financing is increasingly flowing to technology and green industries rather than property.

Over the first nine months of 2026, new yuan loans totalled 11.52 trillion yuan, compared with 14.75 trillion yuan in the same period last year, underlining how subdued borrowing demand has been as the property slump and weak consumer confidence weigh on the economy.

Targeted easing, not broad stimulus

In late September, authorities rolled out targeted rate cuts and mortgage subsidies. Zhou Hao, chief economist at Guotai Junan International, told Reuters the September lending boost reflected the rollout of new policy financial instruments, adding that existing measures were having a positive effect on activity. Finimize described the increase as policy-led credit rather than a recovery in household demand, with infrastructure and state-linked sectors likely to benefit first.

Others were more cautious. Fitch Ratings said the late-September package should modestly improve credit transmission but was unlikely to materially lift overall credit demand or change the property sector’s weak trajectory. Capital Economics said in a note: “We doubt the weakness in broad credit will prompt further monetary easing,” arguing that the PBOC views much of the weakness as structural. The consultancy expects pressure for renewed easing next year and forecasts 20 basis points of rate cuts.

Few analysts expect near-term cuts to benchmark policy rates or banks’ reserve requirement ratios, as the central bank has shown a preference for targeted tools over broad-based stimulus.

What’s next

Attention now turns to third-quarter GDP data due on 19 October. Beijing is targeting growth of 4.5% to 5% this year, but second-quarter growth slowed to a three-and-a-half-year low. Exports have been a bright spot, with September’s trade surplus widening more than expected, but economists will be watching whether the September credit pickup can translate into firmer domestic demand in the final quarter.

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