Chinese Banks Brace for Slower Loan Growth Amid Economic Headwinds

China’s economic slowdown and property market downturn are set to dampen loan growth for the nation’s major banks in 2024, though demand from businesses is expected to keep overall lending growth resilient. Visible Alpha consensus estimates suggest average gross loans in top banks’ portfolios will rise +8.6% year-on-year in 2024, down from an +11.3% increase last year. This projection spans 12 leading Chinese banks, including Industrial & Commercial Bank of China (SSE: 601398), China Construction Bank (SSE: 601939), Agricultural Bank of China (SSE: 601288), Bank of China (SSE: 601658), and others.

While consumer loans are expected to grow by a modest +4.4% year-over-year, commercial loans are estimated to climb +11.6% in 2024, driven by demand from sectors such as manufacturing, green energy, and small-to-medium enterprises (SMEs). Chinese banks are prioritizing commercial lending as businesses seek liquidity, especially in real estate and infrastructure. Government measures to revive the property sector and boost consumption are also spurring banks to extend credit, particularly to developers needing funds to complete unfinished housing projects—a crucial move for stabilizing the market. Consumer loan demand, however, is expected to remain subdued throughout 2024.