BEIJING -- China's new yuan-denominated lending posted stronger than expected growth, expanding 154.7 billion yuan from August to reach 857.2 billion yuan ($139.6 billion) in September, according to the central bank data on Thursday.

Compared with a year ago, the new yuan loans were 70.2 billion yuan higher and marked the highest monthly reading in three months, according to a statement from the People's Bank of China (PBOC).

"The new yuan loans exceeded our expectation," said Bob Liu, an analyst of the China International Capital Corp (CICC). The September reading beat a widely expected 750 billion yuan.

Aggregate social financing, a broad measure of liquidity in the economy from lenders and the shadow banks, rose by 94.5 billion yuan from August but fell 359.8 billion yuan year on year to reach 1.05 trillion yuan in September.

M2, a broad measure of money supply that covers cash in circulation and all deposits, increased 12.9 percent year on year to 120.21 trillion yuan at the end of September, accelerating slightly from a growth of 12.8 percent seen in August.

CICC said faster M2 growth indicated the PBOC's targeted easing policies through the so-called Short-term Liquidity Facility instrument has started to show effects.

The narrow measure of money supply (M1), which covers cash in circulation plus demand deposits, rose 4.8 percent year on year to 32.72 trillion yuan at the end of last month, slowing 0.9 percentage points from August and 4.5 percentage points from a year ago.

For the first nine months, Chinese banks lent a total of 7.68 trillion yuan in renminbi and $61.5 billion in foreign currencies.

The total outstanding loans stood at 84.74 trillion yuan at the end of September, up 13 percent from previous year, while outstanding deposits rose 10 percent year on year to 116.38 trillion yuan.

However, the country's foreign reserves fell by $100 billion from the second quarter to reach $3.89 trillion at the end of September, the PBOC said, without explanation.

From January to September, 4.82 trillion yuan of cross-border trade was settled in yuan, while 720.8 billion yuan of direct investment was settled in yuan, according to PBOC.

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