Opinion | May financial data exceeded expectations, what do you think about the follow-up?

New loans in May were 1.89 trillion yuan, an increase of 392 billion yuan year-on-year, higher than market expectations of 1.5 trillion yuan; loan stock increased by 11.0% year-on-year, up 0.1 percentage points from the previous month. Social financing increased by 2.79 trillion yuan in May, an increase of 837.8 billion yuan year-on-year, higher than the market expectation of 2.5 trillion yuan, mainly due to the increase in government bonds and loans. The growth rate of social financing stock was 10.5%, up 0.3 percentage points from the previous month.

Comment

Policy strengthening and the easing of the epidemic pushed the financial sector to exceed expectations in May. On May 23, the People’s Bank of China held a monetary and credit situation analysis meeting, proposing to “go all out to stabilize the economic fundamentals”, and the policy signal was clear. We believe that the rebound of the discounted bill rate from a low level in late May may indicate an acceleration in loan issuance.

New RMB loans in May increased by 392 billion yuan year-on-year, of which corporate loans increased by 724.3 billion yuan as the main contribution, while household loans increased by 334.4 billion yuan. Specifically look at:

1) Among corporate loans, medium and long-term corporate loans increased by 97.7 billion yuan year-on-year, showing that the investment demand of enterprises is still weak, but the decrease of 395.3 billion yuan in April has eased; discounted bills and short-term loans increased by 5591 yuan year-on-year /328.6 billion yuan, reflecting the impulse phenomenon and the short-term capital turnover needs of enterprises.

2) Among the resident loans, medium and long-term loans increased by 104.7 billion yuan, a net decrease of 31.4 billion yuan compared to April and turned positive, but still a year-on-year decrease of 337.9 billion yuan, mainly due to lower mortgage rates and relaxation of the purchase threshold, but demand still remains Weak; short-term loans increased by 184 billion yuan, a net decrease of 185.6 billion yuan in April, and a slight increase of 3.4 billion yuan year-on-year, mainly due to the easing of the epidemic and the recovery of consumption.

Credit supply is expected to remain relatively stable in June. After a sharp increase in credit in January/March this year, credit in February/April was significantly lower than expected. The rapid credit issuance in May may advance some of the demand in June, but we expect credit issuance in June to remain relatively stable for the following reasons:

1) April-May is usually the low season for delivery, and the end of the season in June is the peak season for delivery, and the delivery volume generally increases month-on-month;

2) The impact of the epidemic has eased, and indicators such as vehicle freight volume indicate that the resumption of work and production in Jiangsu, Zhejiang and other regions has accelerated, and corporate financing needs have gradually recovered;

3) The effect of the stabilizing growth policy since the fourth quarter of last year has gradually emerged. Historical experience shows that the social financing pulse has been ahead of economic expectations and the growth rate of medium and long-term corporate loans for about 6 months. Since 4Q21, the social financing pulse has stabilized, indicating that economic expectations may be 6-7 The month gradually recovered, and the demand for capital expenditure increased.

With the development of policy finance, the growth rate of infrastructure loans is expected to pick up. On June 1, the National Standing Committee proposed to increase the credit line of policy banks by 800 billion yuan to support infrastructure construction. Assuming that the loans of policy banks in 2022 will increase by 800 billion yuan compared with 2021, the loan increment can reach 2.0 trillion yuan, accounting for about 9.2% of the new loans in the banking industry for the whole year, which is a significant increase from 5.8% in 2021. to cross-cycle regulation.

In addition, the issuance of government bonds accelerated in 4Q21, the growth rate of infrastructure investment has bottomed out in April 2022, and the recovery in demand for infrastructure loans in 4Q21 indicates that the growth rate of infrastructure loans may pick up in June-July 2022.

The growth rate of real estate loans is expected to stop falling. Since September 2021, the average mortgage interest rate in major cities has been lowered by about 80bps. In May, the lower limit of mortgage interest rate was lowered by 20bps and the LPR was lowered by 15bps, opening up room for further interest rate cuts.

Stimulated by the loosening of real estate policies, housing sales have rebounded month-on-month since mid-to-late May, and medium- and long-term loans to residents turned positive from a net decrease in May. We believe that the downward trend in mortgage loan growth is expected to ease.

In terms of corporate real estate loans, although the risk appetite of banks is still low, the “stabilized stock” of development loans and the acceleration of M&A loans are expected to stabilize the loan growth rate at around 0%.

risk

The economic growth rate fell more than expected, and the impact of the epidemic was greater than expected.

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