(HONG KONG) Agricultural Bank of China said yesterday that it has temporarily suspended property market loans to counter a surge in real-estate lending, but insisted the country’s property sector was ‘healthy’.

AgBank stopped giving mortgages between Aug 24 and Aug 31 ‘to ensure an even distribution of loans and to avoid a surge at the end of the month’, said Zhang Yun, AgBank’s vice-chairman.

‘But (AgBank) has no intention to stop loans to the property market,’ he told reporters at a press conference in Hong Kong to discus the company’s first-half financial results. ‘It is a temporary measure taken by (AgBank) according to its own needs.’

Chairman Xiang Junbo said government policy measures to cool overheating in China’s real estate market would help prevent ‘drastic fluctuations’, adding that the Chinese property sector is ‘developing and healthy’.

AgBank has the lowest property loan balance among its rival lenders, Mr Xiang added.

On Friday, AgBank – which this month claimed title to the world’s biggest initial public offering in a US$22.1 billion sale – said profit in the first six months rose 40.2 per cent to 45.9 billion yuan (S$9.1 billion), from 32.7 billion yuan last year.

AgBank shares closed almost 2 per cent down at HK$3.47 on the Hong Kong stock exchange yesterday.

Mr Xiang credited growth in the company’s rural lending business and lower bad-loan rates for the rosy half-year figures, but critics have speculated that AgBank’s rural-lending mandate would dent its performance as a public company.

In recent months, Chinese authorities have tightened restrictions nationwide on advance sales of new developments, introduced curbs on loans for third home purchases and raised minimum downpayments for second homes.

Chinese property prices in July rose at a slower pace, suggesting policy measures to cool the sector may be having an impact.

Last week, the Wall Street Journal reported that two of China’s biggest state-run banks – Bank of China and China Construction Bank – have cut back lending to local government investment vehicles whose borrowing has raised concerns over a bad-loan crisis. — AFP

Source: Business Times, 31 Aug 2010