March 5 (Bloomberg) -- Industrial & Commercial Bank of China Ltd., the world’s largest lender by market value, and rival Bank of China Ltd. plan to slow lending in 2010 as the government seeks to curb last year’s record expansion.
“We aim to pace the growth in accordance with corporate demand on both a monthly and quarterly basis,” ICBC Chairman Jiang Jianqing said at the National People’s Congress in Beijing today. Bank of China President Li Lihui said at the same meeting that loan growth in 2010 will slow from last year.
Chinese banks doled out a combined 9.59 trillion yuan ($1.4 trillion) in new loans last year, helping the government turn around the world’s third-largest economy. Housing loans will be cautiously scrutinized this year, China Banking Regulatory Commission Chairman Liu Mingkang said today at the meeting.
ICBC’s lending in 2010 will “definitely be less than last year, but it will still be at a stable level,” Jiang said. “There might be fluctuations, but we will try to smooth it throughout the year.”
In Shanghai trading, ICBC rose 0.4 percent to 4.86 yuan at the trading break, paring this year’s loss to 11 percent. Bank of China, the nation’s third-largest lender, fell 0.7 percent. The benchmark Shanghai Composite Index rose 0.1 percent.
China’s policy makers aim to avert asset bubbles and restrain inflation by limiting new credit at 7.5 trillion yuan this year. Economic growth accelerated to 10.7 percent in the fourth quarter, the fastest pace since 2007, and property prices climbed the most in 21 months in January.
Real Estate
Real estate “is a highly speculative industry” that should be monitored, Liu told reporters before the National People’s Congress. Bad loans at the nation’s banks have fallen to less than 500 billion yuan, with the bad-loans ratio at 1.58 percent, the regulator said.
Premier Wen Jiabao warned of “latent risk” in China’s banks and pledged to crack down on property speculation as the government faces the consequences of flooding the economy with money to drive growth. “The domestic economy still faces some prominent problems,” Wen said in a speech to the National People’s Congress.
Bank of China made about 60 billion yuan in loans in February, Li said in Beijing.
“Pacing credit supply will be a priority for us this year,” Li said. “We look at credit supply progress every week to ensure the amount is appropriate and not exceeding target. That said, if there is a good project in urgent need of financing, we will make an exception.”
ICBC has no near-term plan to raise capital as its capital- adequacy ratio, a measure of financial strength, is “relatively better compared with other banks,” he said. ICBC’s capital- adequacy ratio fell to 12.60 percent at the end of third quarter.
China’s capital markets are accommodative to banks’ fundraising plans, according to CBRC’s Liu. The requirements on capital-adequacy ratios are “dynamic” and no changes have yet to be made, he said during the National People’s Congress.
