China Feb new loans fall to 885.8 bln yuan, below forecasts

Chinese banks extended 885.8 billion yuan ($131.81 billion) in net new yuan loans in February, a sharp drop from January loans and less than expected, as policymakers continue to press lenders to help keep cash-starved companies afloat. Analysts polled by Reuters had predicted new yuan loans of 975 billion yuan in February, down sharply from a record 3.23 trillion yuan in January.

A pull-back in February had been widely expected as Chinese banks tend to front-load loans at the beginning of the year to get higher-quality customers and win market share. Broad M2 money supply grew 8.0 percent in February from a year earlier, below forecasts, central bank data showed on Sunday. Analysts had expected a 8.4 percent rise in M2 - unchanged from January.

Outstanding yuan loans grew 13.4 percent from a year earlier, matching expectations and unchanged from January's rise. Analysts say China needs to revive weak credit growth to help head off a sharper economic slowdown this year, but investors are worried about a further jump in corporate debt and the risk to banks as they relax their lending standards. ($1 = 6.7201 Chinese yuan renminbi) (Reporting by Ryan Woo and Lusha Zhang; Editing by Michael Perry)