China's June new yuan loans seen rising further on policy support - Reuters poll

BEIJING (Reuters) - China's new yuan loans are expected to have risen further in June after nearly tripling in May, a Reuters poll showed, as policymakers continued to push commercial banks to accelerate loan extensions to shore up slowing economic growth.

Chinese banks are estimated to have issued 2.4 trillion yuan ($360 billion) in net new yuan loans last month, up from 1.89 trillion yuan in May, according to the median estimate in the survey of 21 economists.

The expected new loans would be higher than the 2.12 trillion yuan issued in the same month a year earlier.

"Credit supply remained ample in June as policymakers continued to push commercial banks to accelerate loan extensions," analysts at Goldman Sachs said in a note.

"Credit demand likely rebounded as well - the relaxation of COVID restrictions and further easing in property policies could add to credit demand by corporate and household sectors."

The world's second-largest economy has started a slow recovery from the supply shocks caused by extensive lockdowns since the second quarter, although headwinds to growth persist.

The economy is recovering but the foundation of that recovery is not solid and hard work is still needed, Premier Li Keqiang was quoted by state media as saying on Thursday.

The cabinet has announced a package of policy steps, including broadening tax credit rebates and postponing social security payments and loan repayments to support the economy.

Central bank governor Yi Gang has pledged to keep monetary policy accommodative to support the economy.

Authorities have given policy banks 800 billion yuan in new credit quota and allowed them to issue 300 billion yuan in bonds to fund infrastructure projects.

Outstanding yuan loans were expected to grow by 11.0% in June from a year earlier, the same as in May, the poll showed. Broad M2 money supply growth in June was seen at 11.0%, down from 11.1% in May.

The cabinet has told local governments to ensure 3.45 trillion yuan in special bond issuance for infrastructure is completed by end-June, part of the 2022 special bond quota of 3.65 trillion yuan.

Any acceleration in government bond issuance could help boost total social financing (TSF), a broad measure of credit and liquidity. Outstanding TSF rose 10.5% in May, up from 10.2% in April.

In June, TSF is expected to rise to 4.2 trillion yuan from 2.79 trillion yuan in May.

($1 = 6.7024 yuan)

(Reporting by Judy Hua and Kevin Yao; Editing by Tom Hogue)