Total loans extended by 12 listed banks amounted to 21.77 trillion yuan (US$3.19 trillion) in 2009, with property-related loans totaling 5.28 trillion yuan, accounting for over 20 percent, according to statistics compiled by the Guangzhou Daily based on the banks' annual business reports.

The 12 banks extended loans of 1.66 trillion yuan to property developers and 3.62 trillion yuan to individuals for home purchasing, according to the statistics.

Property-related loans extended by three major State-owned banks, Industrial and Commercial Bank of China (ICBC), Bank of China (BOC) and China Construction Bank (CCB), accounted for 70 percent of the total given out by the 12 listed banks.

ICBC's property-related loans totaled 1.3 trillion yuan in 2009, with 421.8 billion yuan flowing to developers and 874.24 billion yuan going to individuals as mortgage loans. BOC and CCB extended 1.27 trillion yuan and 1.21 trillion yuan, respectively.

Related readings: Chinese banks to test quarterly on property loans Banks can refuse third-home loans Shanghai personal mortgage loans way up As for the proportion of property-related loans to total loans, Industrial Bank Co ranked first with the proportion hitting 30.64 percent, and China Merchants Bank came next, with 28.04 percent. The three major State-owned banks' property-related loans all accounted for over 20 percent of their total loans, the report said.

People's Bank of China, the central bank, lowered the interest rates five times in 2008 and provided a 30 percent discount for mortgages, so the banks all increased their lending to make up for the profit losses brought on by the lower interests.

A series of new tough government policies to curb housing price increases would greatly affect property-related lending, the paper said.

According to the State Council's decision released on April 15, the down payment for a family's first home with an area bigger than 90 square meters should be at least 30 percent. And for the second apartment, the required down payment was raised from 40 percent to 50 percent, and the mortgage rate should be no less than 1.1 times the benchmark interest rate. Moreover, a much higher down payment and mortgage rate will be required for third homes and above.

Analysts said the higher interest rate would, to some extent, supplement the losses from shrinking lending, but the banks' income from personal mortgage interests would still decline, the newspaper said.

(China Daily April 22, 2010)