Chinese lenders extended fewer new yuan loans than expected for a second straight month in February. That has sparked expectations of further monetary-easing policies from the authorities to guarantee enough liquidity for the real economy, including manufacturing and services.

Banks lent out 710.7 billion yuan ($112.5 billion) last month, below market expectations of 750 billion yuan, according to data released by the People's Bank of China, the central bank, on Friday.

M2, a broad measure of money supply that covers cash in circulation and all deposits, grew by 13 percent year-on-year by the end of February, 0.6 of a percentage point higher than a month earlier, but below the government's 14 percent target for the year.

In January, Chinese lenders lent 738.1 billion yuan, scattering market expectations of 1 trillion yuan. Meanwhile, M2 hit the lowest level since June 2001.

"The lower-than-expected amount of new yuan loans last month was probably caused by the fact that banks have become more prudent in lending, and lending demand from companies declined as economy further slowed," said Wu Xiaoling, a former deputy governor of the PBOC.

Wu added that the lending of some banks, especially those joint-stock commercial banks, might have been restrained by a deposit-to-loan ratio of 75 percent.

"The lending figures from the central bank show that enterprises are still not optimistic about the profit prospects, and are hesitant to provide more medium- and long-term loans to expand investment," said E Yongjian, an economist at Bank of Communications Co Ltd.

He said new property loans were also in the doldrums, because the number of house purchases remains low. "The low figures can also be attributed to the restraints on lending to local government through financing vehicles," he said.

The amount of new yuan loans will probably increase in March because banks usually do their best to absorb deposits at the end of each quarter, and thereby are able to loan more.

New yuan deposits among lenders reached 1.6 trillion yuan in February, 282.4 billion yuan more than the same month a year earlier.

Liu Ligang, head of China economics at the Australia and New Zealand Banking Group Ltd, expected that new yuan loans in the first quarter will likely reach the 2 to 2.3 trillion yuan target set by the banking regulators.

Liu said that although the CPI slowed to 3.2 percent in February, the inflation outlook is now uncertain, which will make policy easing by the PBOC more cautious going forward.

wangxiaotian@chinadaily.com.cn