China’s four largest state-owned banks are reportedly planning to set more conservative loan growth targets for 2024. These institutions, which include the Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China, and Bank of China, are expected to aim for approximately 10% loan growth in the upcoming year.
This projected target represents a decrease from the average loan growth experienced in 2023, which stood at 11.2%. The adjustment in targets comes at a time when the central bank of China has been actively encouraging financial institutions to increase lending as a measure to bolster economic activity.
However, the banks are facing internal pressures that influence their lending strategies. Specifically, regulatory efforts aimed at reducing borrowing costs have led to a contraction in the banks’ net interest margins. This squeeze on profitability means that the financial institutions must carefully balance the central bank’s directive to lend more with the need to maintain their financial health. The expectation is that despite these pressures, the collective loan books of these major banks will still see an increase of around 10% in 2024.
