China's banks extended 60 billion yuan in new yuan loans in August, according to data from the People's Bank of China released Monday.
The figure was far below the 480 billion yuan consensus forecast tracked by Investing.com, highlighting continued weakness in demand for bank credit. Still, lending recovered from a record 340 billion yuan contraction in July.
The rebound came as China's slowing economy and subdued consumer sentiment, particularly in the housing market, continued to weigh on borrowing demand.
Outstanding yuan loans stood at 282.35 trillion yuan at the end of August, up 4.9% from a year earlier.
The pace of loan growth slowed from 5.1% in July, marking a record low and underscoring the persistent weakness in bank credit expansion.
The soft lending trend also reflects a changing financing landscape, with traditional sectors losing momentum while technology companies increasingly turn to bond markets rather than bank loans to raise funds.
Aggregate financing, a broader measure of credit across China's financial system, reached 1.66 trillion yuan in August, suggesting that government bond issuance continued to provide support to overall financing activity.
Meanwhile, the M2 money supply rose 7.5% year over year to 356.808 trillion yuan in August, easing from 7.7% growth in July and coming in slightly below the 7.6% market forecast.
Taken together, the figures point to persistently weak credit demand, even as broader financing conditions are supported by government bond issuance.
"While the [10 trillion yuan] debt resolution program has had some impact on loan growth, the recent slowdown can no longer be attributed to it, and instead points to still highly depressed private sector credit demand, as we recently analyzed," Nomura analysts said in a note to clients.
