China bank lending increases 6% in August

But growth will likely moderate towards yearend.

The People's Bank of China, the central bank, said Chinese banks extended US$116.2 billion in new loans in August, up 6% from US$109 billion in July. Analysts believe that credit may fall in the coming months, however.

Bank of America Merrill Lynch sees stable and robust credit growth overall. It estimates headline new loans will probably moderate towards yearend since lending traditionally slows at this time. The bank also feels the chance of another interbank liquidity squeeze similar to that last June is extremely small.

It said PBOC will do whatever it can to prevent a possible liquidity squeeze. As a consequence of the June cash crunch, PBC ordered banks to strengthen liquidity management while infusing US$2.8 billion to ease shortages in the banking system.