Financial Times: The total amount of loans in April is not small, and the growth rate of money supply will stabilize in the coming months

On May 11, the People's Bank of China (PBoC) released financial data for April.

Among them, at the end of April, the stock of social financing scale was 389.93 trillion yuan, a year-on-year increase of 8.3%, and the growth was relatively stable, basically matching the expected target of economic growth and price level; In terms of credit 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 in the same period in history.

After the release of financial data in April, market experts generally said that the total amount of loans in the month was "not small", the credit structure continued to be optimized, the interest rate level remained low, and the RMB exchange rate remained basically stable at a reasonable and balanced level, creating a good monetary and financial environment for high-quality economic development.

April loan "small month is not small"

Balanced delivery has achieved remarkable results

Historically, April, July, and October are usually small months for loans. According to the latest data, the scale of new RMB loans in April this year increased slightly compared with the same period last year.

In this regard, the market generally believes that the judgment on the growth rate of RMB loans in 2024 should take into account the factors of last year's high loan growth base. At present, the central bank has achieved remarkable results in guiding the reasonable growth and balanced delivery of loans, the phenomenon of "big and small months" has been significantly alleviated, 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.

"At present, the credit supply is 'small month', and the pace is more stable and moderate." 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, also 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.

The slowdown in the growth rate of money supply is affected by a combination of factors

In the financial data released this time, the decline in the growth of broad money M2 at the end of April has received widespread attention from the market. According to the data, the balance of M2 at the end of April was 301.19 trillion yuan, a year-on-year increase of 7.2%, down from March.

Zhang Yu, chief macro analyst of Huachuang Securities, explained to the Financial Times that there are several main factors for the current decline in monetary growth.

First, the bond market has continued to rise since the beginning of this year. Residents' enthusiasm for purchasing wealth management has increased, bank deposits have been diverted and transformed into non-bank products such as wealth management, non-bank institutions have abundant funds, and the demand for borrowing money from banks to purchase bonds has decreased. In April, the amount of funds lent by banks to non-bank institutions dropped significantly, and it is roughly estimated that the volume of the reduction may be around 3 trillion yuan, which is similar to the reverse process of the bond market adjustment at the end of 2022. At that time, deposits were "flowing back" to banks, and the growth rate of M2 in November 2022 was 0.6 percentage points higher than that in October. Recently, deposits have been "diverted" to the financial market, causing the growth rate of M2 to decline. The growth rate of M1 has also fallen due to this, as bond prices have risen, the yield of related wealth management product investment has risen, and the situation of corporate demand deposits "moving" to wealth management is also more obvious.

Second, the phenomenon of idling funds and manual interest supplementation has been standardized. Recently, many departments have intensified their efforts to regulate the phenomenon of "low loans and high deposits" and the phenomenon of "low loans and high deposits" and manual interest payments by banks, and a considerable number of inflated and irregular deposits and loans in the past have decreased, and there is a "crowding" effect in the short term. However, the demand of financial institutions for an effective real economy is still fully satisfied, and the financial aggregate supports the economy more effectively and efficiently. This is not only a manifestation of the high-quality development of finance, but also promotes the main business of the business entity to avoid the precipitation of funds and idling.

Third, the optimization and adjustment of the value-added accounting of the financial industry also has an impact. In the past, the quarterly accounting method of added value of the financial industry referred to the growth rate of deposits and loans, but since the first quarter of this year, the Bureau of Statistics has revised it to refer to the indicators of net interest income, fee and commission income, which can more objectively reflect the contribution of the financial industry to the real economy and is more in line with the annual accounting data. Since April, the motivation of local governments to increase the added value of the financial industry by supervising deposits and loans has weakened significantly, which is also related to the decline in the growth rate of financial aggregates in April, and the related impact may continue to appear during the year. However, efficient enterprises that really need capital will receive more financing, and financial support for the real economy has not weakened.

So, what do you think about the next M2 trend? Many interviewees told reporters that the growth rate of the money supply will stabilize in the coming months. "At present, the financing demand of the real economy is gradually improving. In the economic operation, the positive factors have increased, the momentum has continued to increase, the economic recovery trend is obvious, and the financing needs in the fields of scientific and technological innovation, green development, and inclusive small and micro enterprises will also be more visible. Dong Ximiao, chief researcher of Zhaolian, analyzed.

In addition, the issuance of 1 trillion yuan of ultra-long-term special treasury bonds is also seen as a positive factor. "The counter-cyclical adjustment of fiscal policy will gradually accumulate strength, issue and make good use of ultra-long-term treasury bonds as soon as possible, and accelerate the issuance and use of special bonds, which will also support the growth of monetary aggregates." Zhang Yu explained.

As for the aforementioned "financial move" phenomenon, Zhang Yu believes that since April, the People's Bank of China has repeatedly issued a reminder of the risk of the bond market, 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.

Financing costs have been stable and declining

The role of interest rates in optimizing resource allocation has been effectively played

As for the issue of financing costs, which is widely concerned by the market, the data shows that loan interest rates remain at historically low levels. The weighted average interest rate on 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.

Dong Ximiao said that 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 relending interest rate for supporting agriculture and small enterprises, and the policy effect has been obvious, and the loan interest rate has entered the "3" era, effectively reducing the interest burden of enterprises.

So, what do you think about the current level of interest rates? Experts interviewed generally believe that interest rates remain low at the moment.

"The LPR announced in April was flat compared with the previous month, continuing the previous stable trend, in line with market expectations, and also reflecting the characteristics of the current monetary policy seeking balance in stability." Wen Bin, chief economist of Minsheng Bank, said that at present, some credit interest rates have been low, and the LPR quotation remains unchanged, aiming to prevent the rotation and improve efficiency, which can not only boost economic growth, but also guide the adjustment of the structure 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.

In addition, the reporter also learned that in order to standardize the order of competition in the deposit market, the interest rate self-discipline mechanism recently issued an initiative to prohibit banks from collecting deposits at high interest rates through manual interest supplements, and urged banks to reduce deposit interest rates "as well as on the outside", and the reduced interest expenses can also further enhance the bank's ability to support the economy and sound operation. Dong Ximiao explained that in the past, manual interest rate supplementation broke through the authorized upper limit of deposit interest rates in disguise, raised the cost of bank liabilities, and affected the sustainability of financial support for the real economy. At the same time, the high interest rate of savings has had a certain impact on the order of the financial market, leading to the intensification of inter-bank competition.

"In the next step, real interest rates will gradually decline as prices rise moderately." According to the analysis of industry insiders, in recent years, various nominal interest rates have continued to decline and are now at a historically low level. In the short term, low prices have a certain impact on real interest rates, but this impact is structural and phased. At present, the mainland's economic rebound is constantly improving, prices will rise moderately, and the impact of low prices on real interest rates is also phased, and will gradually improve in the future.

The credit structure continued to be optimized

Solid support in key areas

In addition, focusing on the credit delivery structure, the Financial Times reporter paid attention to the fact that the current stock of financial resources has been continuously revitalized, the investment direction has been further optimized, and green loans, inclusive small and micro loans, and medium and long-term loans for the manufacturing industry have continued to maintain a high growth rate of more than 20%, which is significantly higher than the growth rate of all loans.

According to the analysis of industry experts, doing a good job in the "five major articles" has become the driving force of the real economy of financial services. The Central Financial Work Conference sounded the clarion call to accelerate the construction of a financial power, and proposed to do a good job in science and technology finance, green finance, inclusive finance, pension finance, and digital finance.

"The fields involved in the 'five major articles' are all trillion-level 'big tracks', which will help promote the financial industry to get rid of the traditional path dependence on large industries and large enterprises such as real estate and infrastructure, continuously improve comprehensive service capabilities, and cultivate new business and profit growth points." Le Yugui, general manager of the Strategy and Policy Coordination Department of China Construction Bank, believes.

"Recently, the People's Bank of China has set up a new 500 billion yuan re-loan for scientific and technological innovation and technological transformation, relaxed the scope of support for inclusive small and micro loan support tools, and continued to implement the special re-loan for inclusive pension. Dong Ximiao said.

Dong Ximiao analyzed that the new re-lending tool provides financial institutions with low-cost stable funds, which will help guide commercial banks to better do a good job in the five major articles, leverage more social capital to invest in scientific and technological innovation, and help promote a new round of large-scale equipment renewal.

The optimization of credit investment can also reflect the requirements for revitalizing financial resources. Providing more convenient and preferential loan support to market entities that have real and reasonable financing needs and are in line with the direction of high-quality development is conducive to revitalizing existing funds, alleviating the idling of capital precipitation, and improving the efficiency of financial resource allocation. Zhou Shaofang, head of Hunan Baling Furnace Energy Conservation Co., Ltd., said that the company just got a credit loan of 10 million yuan in March, with an interest rate of only 3.65%, which alleviated the gap in technical transformation funds in a timely manner, and it is expected that after the new project is put into operation, the company's production of special energy-saving equipment for industrial furnaces will achieve energy saving and carbon reduction of 40%-60%.

Editor-in-charge: Shi Jian | Review: Li Zhen | Supervisor: Wan Junwei

(Source: Financial Times)