Bank of China sees mortgage growth slowing in 2011

BEIJING (Reuters) – Bank of China Ltd (3988.HK: Quote, Profile, Research), the country’s No. 4 lender, expects growth in mortgage lending to slow this year as the government moves to cool property prices, the bank’s president said on Saturday.

“Lending will of course continue, but it will slow down this year,” Bank of China’s (601988.SS: Quote, Profile, Research) President Li Lihui told Reuters on the sidelines of the National People’s Congress.

The bank has not released its full-year 2010 lending figures, but overall yuan-denominated corporate loans rose about 9 percent in the first six months of the year, according to its interim report announcement.

Banks have been told to restrict lending to developers and a number of other measures have been imposed, such as higher downpayments and a maiden property tax in two cities, in a bid to cool the country’s near-record home prices.

China’s banking regulatory head has also told banks that they were lending excessively fast, topping the “extreme upper limit” set by the government, a source told Reuters earlier this week, highlighting deep official unease about the threat that rampant credit growth poses to the sector.

The bank joins bigger rival Industrial and Commercial Bank of China (1398.HK: Quote, Profile, Research)(601398.SS: Quote, Profile, Research), the world’s most valuable lender by market capitalization, in saying it expects lending growth this year to slow.

(Reporting by Kelvin Soh; Editing by Ken Wills)