Tags: bank | of | china | lending

Bank of China: Credit Boom Will Continue

By    |   Tuesday, 28 Jul 2009 03:09 PM

The Bank of China, the country's third largest bank, says it will keep on lending out money until the government restricts its current credit boom.

A bank spokesman says the institution is sticking to a goal to account for 10 percent of China's loans.

The bank lent US$132 billion during the first half of this year, more than any other in China, Bloomberg reported.

Yet the overall lending spree has fueled fears that a bubble is on the rise in China and that many loans will turn sour.

"Banks are willing to sacrifice their long-term health for short-term gains in profit, and more importantly, to please the government," said Wen Chunling, a Beijing-based analyst at Fitch Ratings, according to Bloomberg.

"A significant part of the loans extended in the first half may become non-performing over the next five to 10 years."

Stock prices have been on the rise in China, and many companies are raising fresh equity amid the boom.

On Monday, shares of toll-road operator Sichuan Expressway tripled on the Shanghai Stock Exchange, with market capitalization hitting around $3.4 billion, the Wall Street Journal reported.

Meanwhile, Chinese construction company China State Construction Engineering Corporation raised $7.3 billion to become the world's biggest initial public offering since March of last year.

More IPOs are on the way as speculators shrug off fundamentals.

"Speculation on newly listed shares is a common practice in a bullish market," said Zhang Ping, an analyst in Nanjing for Hutsai Securities Co., the Wall Street Journal reported.

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The Bank of China, the country's third largest bank, says it will keep on lending out money until the government restricts its current credit boom. A bank spokesman says the institution is sticking to a goal to account for 10 percent of China's loans. The bank lent US$132...
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2009-09-28
Tuesday, 28 Jul 2009 03:09 PM
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