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INSTANT VIEW 3- China Sept bank lending 623.2 billion yuan

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BEIJING, Oct 12 (Reuters) - Chinese banks made 623.2 billionyuan worth of new loans in September, the People's Bank of Chinasaid on Friday, slightly lower than market expectations for 650billion yuan.

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Key POINTS:

-- New bank lending in September at 623.2 billion yuan

-- Total social financing in September was 1.65 trillionyuan

COMMENTARY:

NIE WEN, ANALYST, HWABAO TRUST IN SHANGHAI:

"The total social financing aggregate grew at a fast pace inSeptember, mainly coming from undiscounted bank acceptances andcorporate bonds.

"The central bank seems to have shifted its focus more onthe social financing aggregate to steer its monetary policy. Sofrom this sense, the new lending data of 623.2 billion yuan isstill within a reasonable range, though a bit lower thanexpectations.

"As corporate bonds and bank lending tilt more towards stateenterprises, private sector firms are still facing relativelytight cash flows.

"With the property market showing signs of recovering andconsumer prices become more stable, the central bank may cut thereserve requirement ratio in the fourth quarter to lowerborrowing costs."

SHEN JIANGAUNG, CHIEF ECONOMIST, MIZUHO SECURITIES IN HONGKONG:

"The new yuan loans in September are lower than marketexpectations, but it is not a surprise since domestic media havereported that China's top four state-owned banks extended fewernew loans in September than compared to August.

"The fall in new lending shows the central bank might havetaken measures to control credit supply given thehigher-than-expected reading in August.

"Liquidity conditions are still tight in China and I thinkthe central bank should cut RRR as soon as possible."

SUN JUNWEI, CHINA ECONOMIST, HSBC IN BEIJING:

"The new yuan loan data is slightly lower than marketexpectations, but we should also pay attention to the totalsocial financing aggregate, which is quite a strong figure andreflects the effect of policy loosening.

"We should notice that the proportion of bank lending in thetotal social financing pool has decreased over recent quartersand we should give more stress to other financing channels, suchas corporate bond issuance, when gauging the total liquidity inthe economy."

STEPHEN SCHWARTZ, ASIA CHIEF ECONOMIST, BBVA IN HONG KONG:

"I would call that number broadly in line with ourexpectations (650 billion yuan)... but we still have yet to seea meaningful pick up in any of the activity indicators.

"This is a good forward indicator of investment. We're stillexpecting growth to begin picking up in the fourth quarter basedon more stimulus, especially after the leadership transititionis settled.

"Our outlook is for a gradual pickup from the recent slowmomentum into 2013. We're going with a growth outlook of 7.9percent for next year. Our projection is down, we've loweredthat, we had 8.3 previously."

LINKS:

For details, see the People's Bank of China website at

MARKET REACTION:Mainland Chinese share trading had closed for the week ahead ofthe data, ending the week on a choppy note ahead of tradestatistics due at the weekend. The CSI300 Index

gained0.5 percent for the week.The Chinese yuan

had earlier firmed against thedollar on Friday, hitting an intraday record high for the secondstraight day.

BACKGROUND:

-- China is targeting total lending of 8 trillion yuan for2012, sources told Reuters early this year.

-- Chinese banks beat market expectations in August byextending 703.9 billion yuan of new yuan loans, reinforcing betsthat the government is relaxing loan restrictions to bolsterflagging economic growth.

-- The People's Bank of China, the central bank, pledgedlast month to "fine-tune" monetary policy to cushion the economyagainst global economic headwinds while closely watching thepossible impact from recent policy loosening in the UnitedStates and Europe.

-- China's central bank has cut interest rates twice in aspate of one month from June to July to shore up the economy.

-- The central bank has also cut the amount of cash banksmust keep in reserves three times since November, freeing up anestimated 1.2 trillion yuan ($190 billion) for new lending.

-- In the absence of any stimulus package, Beijing hasfast-tracked some infrastructure projects and injected cash intothe economy via central bank's open market operations.

(Reporting by China Economics Team; Editing by Nick Edwards)

((lan.wang1@thomsonreuters.com)(86 10 6627 1032)(ReutersMessaging: lan.wang1.thomsonreuters.com@reuters.net))

Keywords: CHINA ECONOMY/MONEY