Banking

Mortgage loan volume declines: BoCom

(Agencies)
Updated: 2010-04-22 13:54

Bank of Communications Ltd, China's fourth-largest publicly traded lender, said it made fewer mortgage loans in February and March as it reins in lending and the government seeks to curb property speculation.

"We have had an obvious drop in volume over the last two months," Dicky Yip, an executive vice-president at BoCom, as the bank is also known, said in an interview in Shanghai Wednesday. He declined to give loan-volume figures.

China's bank regulator has told the nation's larger banks to conduct quarterly stress tests on property loans and ensure risks are strictly controlled. Chinese banks extended a less- than-estimated 510.7 billion yuan ($74.8 billion) of new loans in March after the central bank told lenders to set aside larger reserves and pace credit growth.

The housing ministry this week ordered developers not to take deposits for sales of uncompleted apartments without proper approval. That added to curbs on loans for third-home purchases, increased down-payment requirements and higher mortgage rates announced in the past week, after property prices in 70 cities jumped a record 11.7 percent in March.

Yip said the tightening measures would have limited impact on BoCom because the bank focuses on borrowers making their first home purchases.

"We may start feeling more pressure if the government raise the requirement on borrowers'affordability," he said. "So far it doesn't look like that's something they will be changing soon."

China's economy grew 11.9 percent in the first quarter, the most in almost three years, fanning concern that record lending is creating asset bubbles. The government has twice this year told banks to set aside more reserves and pace credit growth.

Yip, the head of China for HSBC Holdings Plc, is in charge of BoCom's retail banking business. He joined the Chinese bank in 2005 after the UK based-bank bought a stake in the Chinese lender and still holds a non-executive position at HSBC.