What is the impact of the steady growth of social finance, the idling of funds and the standardization of manual interest supplementation on the financial data in April?

Finance Associated Press

2024-05-11 17:28Published on the official account of Cailianshe under Shanghai Poster Industry Group

Finance Associated Press, May 11 (Reporter Wang Hong) Today, the central bank released a report on financial statistics for April. According to the report, the balance of broad money (M2) at the end of April was 301.19 trillion yuan, a year-on-year increase of 7.2%. Industry analysts said that the year-on-year growth rate of M2 balance at the end of April was lower than that in March, mainly due to the recent "diversion" of deposits to the financial market, the idling of funds and the standardization of manual interest supplements, and the optimization and adjustment of value-added accounting in the financial industry. Money supply growth is expected to stabilize in the future.

The data also shows that the stock of social financing scale at the end of April was 389.93 trillion yuan, a year-on-year increase of 8.3%, and the cumulative increase in social financing scale in the first four months was 12.73 trillion yuan. Analysts pointed out that the current social finance indicators can better reflect the strength of financial support for the real economy. In addition, the balance of RMB loans increased by 9.6% year-on-year at the end of April, the growth rate was the same as that at the end of the previous month, the total amount of credit maintained a steady growth, and the financing cost achieved a steady decline.

The year-on-year growth rate of M2 balance fell due to three factors

According to the data, at the end of April 2024, the balance of broad money (M2) was 301.19 trillion yuan, a year-on-year increase of 7.2%, which basically matched the expected target of economic growth and price level. From the perspective of the two-year average growth rate excluding the impact of the base, the average growth rate of M2 at the end of April 2023 and 2024 was 9.8%, which was higher than the average growth rate of the same period from 2018 to 2022, maintaining reasonable and abundant liquidity. The growth rate of asset management products rebounded rapidly, with a year-on-year increase of 11.3% at the end of April, which diverted on-balance sheet deposits to a large extent.

The year-on-year growth rate of M2 balance at the end of April fell by 1.1 percentage points compared with March. Zhang Yu, chief macro analyst of Huachuang Securities, said that this is mainly affected by factors such as the "moving" of bank deposits, the idling of funds and the standardization of manual interest supplements, and the optimization and adjustment of value-added accounting in the financial industry. The central bank has long predicted the factors affecting the decline in monetary growth, and has continued to speak out through the press conference of the State Council Information Office and other occasions.

"Since the beginning of this year, the bond market has continued to rise, residents' enthusiasm for buying wealth management has risen, bank deposits have been diverted and transformed into non-bank products such as wealth management, and the funds lent by banks to non-bank institutions have fallen by about 3 trillion yuan in April. Recently, deposits have been diverted to the financial market, causing a downward trend in M2 growth. The growth rate of M1 has also fallen due to this", Zhang Yu explained, in addition, in addition, many departments have recently increased the standardization of the phenomenon of "low loan and high deposit" idling arbitrage of funds, and manual interest payment by banks, and a considerable part of the inflated and non-standard deposits and loans in the past have decreased, and there is a "squeeze" effect in the short term.

Zhang Yu expects the growth rate of money supply to stabilize in the coming months. There are several main reasons: First, the financing demand of the real economy is gradually improving. Second, government financing is expected to accelerate. The gradual accumulation of counter-cyclical adjustment of fiscal policy, the early issuance and use of ultra-long-term treasury bonds, and the acceleration of the issuance and use of special bonds will also support the growth of monetary aggregates. Third, the bond market has gradually returned to the logic of fundamentals. "Since April, the People's Bank of China has repeatedly reminded the bond market risks, and the yield of 10-year treasury bonds has risen since late April, resulting in fluctuations in wealth management yields and a decline in attractiveness.

At the end of April, social finance increased by 8.3% year-on-year, and experts believe that social finance can better observe the strength of financial support

According to the data, at the end of April, the stock of social financing was 389.93 trillion yuan, a year-on-year increase of 8.3%, which basically matched the expected target of economic growth and price level. From January to April, the cumulative increase in the scale of social financing was 12.73 trillion yuan, which was at a high level in the same period in history.

"The scale of social financing can better reflect the strength of financial support for the real economy," Zhang Yu said, adding that M2 has some limitations as an indicator of financial aggregates. After some funds are diverted from deposits to wealth management, they are no longer included in the M2 statistics, but the supply of funds in the real economy has not changed fundamentally, and the total amount of financing from the perspective of M2 is not comprehensive enough.

Zhang Yu pointed out that with the accelerated development of direct financing and the deepening of finance, the indicators to measure financial support for the real economy also need to be adjusted and optimized accordingly in light of changes in the situation. The central banks of major advanced economies have also successively adjusted their main money supply pegging to look at the strength of financial support more comprehensively. In the future, the relative reference value of the scale of social financing as a measure of total volume will continue to be reflected.

"At the end of April, the scale of social financing generally maintained a steady growth, and it is expected that the issuance of government bonds will be accelerated during the year, and there will still be a considerable net financing scale throughout the year, which will form a stable support for the growth rate of social financing," Zhang Yu also said, and the steady growth of financial aggregates should be supported by endogenous economic demand. The macro policy direction needs to adapt to the changes in the development stage, shift from increasing supply to increasing consumer demand, and strive to give full play to policy synergy, maintain the necessary fiscal expenditure intensity, and continue to release the endogenous potential of the economy.

RMB loan balance increased 9.6% year-on-year at the end of April

According to the data, at the end of April, the balance of RMB loans was 247.78 trillion yuan, a year-on-year increase of 9.6%, and the growth rate was the same as that at the end of the previous month. From January to April, loans increased by 10.19 trillion yuan, a relatively high level for the same period in history.

The market generally believes that the central bank has achieved remarkable results in guiding the reasonable growth and balanced distribution of loans, and the stability and sustainability of credit delivery have been enhanced. The amount of credit in April effectively met the reasonable financing needs of the real economy, which was in line with the current economic growth and market expectations.

Zhang Jun, chief economist of Galaxy Securities, said that the "roller coaster" phenomenon of credit delivery caused by the "good start" of financial institutions in previous years has been reduced this year, and the indicator orientation of financial institutions to rush performance has weakened, and credit delivery has become more stable. Liang Si, a researcher at the Bank of China Research Institute, believes that this year's credit as a whole will show the characteristics of balanced delivery. In the period of economic structural transformation, it is necessary not only to look at the monthly credit growth, but also to pay attention to judging the financial support from the cumulative increase of loans.

In terms of loan interest rates, the weighted average interest rate of new loans issued by enterprises in April was 3.76%, basically unchanged from the end of the previous month and 23 basis points lower than the same period last year. The interest rate on new loans for personal housing was 3.7%, 2 basis points lower than the previous month and 48 basis points lower than the same period last year, both at historical lows.

Since the beginning of this year, the People's Bank of China has guided the market interest rate downward through measures such as lowering the deposit reserve ratio and the interest rate on relending to support agriculture and small enterprises. The LPR announced in April was unchanged from the previous month, continuing the previous stable trend.

Wen Bin, chief economist of Minsheng Bank, said that at present, some credit interest rates have been low, and the LPR quotation remains unchanged, which is also aimed at preventing the rotation and improving efficiency, which can not only boost economic growth, but also guide the structural adjustment of existing financial resources. Zhou Maohua, a macro researcher at Everbright Bank, believes that the policy interest rate and LPR are not as low as possible, and it is more necessary to guard against the risk of potential arbitrage idling and improve the efficiency of policy implementation.

Banks are prohibited from manually making interest payments, and the pressure on the liability side of banking institutions may be eased. The research team of the fixed income department of CITIC Securities believes that the deposit interest rate is expected to fall further in the second quarter to ease the pressure on the liability side, which will help strengthen the bank's interest rate risk management ability and consolidate the results of the steady decline in the financing cost of entities.

(Financial Associated Press reporter Wang Hong)