* Feb new loans 1.36 trln yuan vs f’cast 950 bln yuan * Feb M2 money supply +10.1% y/y, vs f’cast of +9.4% * Feb TSF 1.71 trln yuan, vs f’cast 950 bln yuan * C.bank seeks to cool credit growth as economy rebounds (Adds analyst comment, details) BEIJING, March 10 (Reuters) - New bank lending in China fell less than expected in February from January as the central bank seeks to cool credit growth to contain debt risks while maintaining support for ailing small firms. Chinese banks extended 1.36 trillion yuan ($208.86 billion) in new local-currency loans in February, down from a record 3.58 trillion yuan in January but beating analyst expectations, according to data released by the People’s Bank of China on Wednesday. Analysts polled by Reuters had predicted 950 billion of new yuan loans in February, versus 905.7 billion yuan a year earlier. “Credit supply was stronger than expected,” said Industrial Securities analyst Luo Yunong. “The central bank has tightened credit at the margin, but real financing demand is very strong.” China’s central bank has pledged to stabilise the country’s overall debt level that jumped last year due to stimulus measures, but has said it will avoid a sudden policy shift and will continue to support ailing small firms. Last year, the central bank rolled out a raft of measures including cuts in interest rates to support the coronavirus-hit economy. But it has kept the benchmark lending rate, the loan prime rate, unchanged since May. China’s regulators have told banks to trim their loan books this year to guard against bubble risks, banking sources said. But the government has pledged to boost lending to small businesses from large banks by over 30% in 2021. China set a growth target of above 6% for 2021, but analysts expect the economy to grow by 8% or more. China has pledged to keep money supply and total social financing growth largely in line with nominal economic growth this year. Broad M2 money supply in February grew 10.1% from a year earlier, central bank data showed on Wednesday, above a forecast 9.4% in a Reuters poll. It rose 9.4% in January. Outstanding yuan loans grew 12.9% from a year earlier compared with 12.7% growth in January. Analysts had expected 12.7% growth. SLOWING CREDIT GROWTH Annual growth of outstanding total social financing (TSF), a broad measure of credit and liquidity in the economy, quickened to 13.3% in February from 13% in January. Analysts expect that growth rate to slow to about 11% at the end of 2021. “Looking ahead, we suspect that the latest uptick in lending is just a blip and that broad credit growth will resume its downward trajectory before long,” Capital Economics said in a note. TSF includes off-balance sheet forms of financing outside the conventional bank lending system, such as initial public offerings, loans from trust companies and bond sales. In February, TSF fell to 1.71 trillion yuan from 5.17 trillion in January. Analysts polled by Reuters had expected February TSF of 950 billion yuan. (Reporting by Judy Hua and Kevin Yao. Editing by Sam Holmes and Mark Potter)