In China, retail lending growth of the banking system fell significantly in 2017 Australia, China, India, South Korea and Thailand witnessed weaker retail mortgage lending growth and stronger non-mortgage consumer lending growth in 2017 Regulations and government intervention contributed to slower retail lending growth in countries like China, India, and Thailand The aggregate retail lending given out by banks in the twelve Asia Pacific markets grew by 12% in 2017, a deceleration from 16% in the previous year. China accounted for 48% of these markets’ aggregate retail loans, up considerably from 29% in 2011, while Australia, Japan and South Korea saw their share decline to 15%, 14% and 7%, respectively. Even though half of these markets experienced stronger retail loan growth in 2017, the slowdown in China’s banking sector led to the slower growth in the region. Australia, China, India, South Korea and Thailand witnessed weaker retail mortgage lending growth and stronger non-mortgage consumer lending growth in 2017. In China, retail lending growth of the banking system fell significantly in 2017, as stricter housing policies and relatively tightened liquidity conditions led to slower growth of mortgage loans. However, Chinese banks’ non-mortgage consumer loans grew strongly, partially because mortgages rules tightened and some borrowers turned to short-term consumer loans to fund their down payments. In India, non-mortgage consumer loans of banks expanded rapidly in 2017, especially credit card loans and other personal loans. Indians increased the usage of credit cards after demonetisation, and thus credit card loans went up 38% in 2017. However, there have been concerns about other personal loans in India, due to lack of information on them. In Thailand, credit card lending growth fell as the central bank tightened the credit-card rules to deal with high household debt in the country, while the growth of car loans was up from 1.4% in 2016 to 8.4% due to the end of the five-year lock-up period for vehicles bought under the first-car buyer scheme. Both retail mortgage lending growth and non-mortgage consumer lending growth improved in Hong Kong, Indonesia, Singapore and Taiwan. In Hong Kong, strong housing demand led to higher mortgage loan growth, despite tightened mortgage measures by the government to manage asset risks and bubble fears. The retail credit growth in Indonesia was up significantly from 7% in 2016 to 12.4% in 2017, mainly due to the support from government. On the other hand, both growth eased in Japan, Malaysia and the Philippines. Bank retail credit expanded at a slower pace in the Philippines, but still faster than most markets. This can be attributed to fewer residential property launches and slower vehicle loan growth. The moderate growth of bank retail mortgage lending is expected in markets such as Australia, China, Hong Kong, Japan and South Korea in the short term, which will heavily influence retail lending growth in the Asia Pacific region.
