MNI BRIEF: China's Leverage Ratio Jumps In Q2- PBOC's Ruan

China’s macro leverage ratio jumped in the second quarter but should stabilise in the second half of the year thanks to a recovery in corporate profits and higher inflation, People’s Bank of China statistics department chief Ruan Jianhong, told reporters on Friday.

Macro leverage printed at 291% of GDP in Q2, rising 9.4 percentage points from the end of the previous year and 1.5 percentage points from Q1, Ruan said, attributing the rise to a pick up debt growth as the economy left the pandemic behind.

Efforts by the Bank to expand credit via lowering the Loan Prime Rate so far this year have driven declines in corporate lending rates, and the weighted average interest rate for new corporate loans was 3.85% in September, 14 basis points lower than the same period last year. As of the end of September, the weighted average interest rate on existing mortgage loans dropped significantly to 4.29%, down 42 basis points from the end of the previous month.

The Bank will continue to enhance the stability and sustainability of credit, and total social financing and loans will remain stable in Q4, Ruan said. (See MNI: Scope For China Fiscal, Monetary Stimulus Seen As Limited)