China loan growth disappoints in October

Alternative credit channels picked up the slack.

According to an analysis by Berstein Research, new loan growth of RMB 505bn in Oct was 14% lower than expected & down 19% MoM.

"This marked the weakest monthly loan growth total since July 2011. Despite the weak headline figure, total credit formation of RMB 1.29tn was inline with YTD averages," said Berstein.

"Total deposits fell RMB 280bn in Oct, driven by RMB 664bn of HH outflows. The HH outflows were the result of the typical seasonality we see during the 1st month of each qtr when banks shed the short-term deposits gathered at the end of the previous qtr," it said.

"RMB loans accounted for just 42% of total credit formation in Oct (ex-bills) - the lowest monthly figure since 2007. This highlights the increasing importance of alternative financing channels in China," it said further.