Abstract: The growth rate of household loans still underperforms the market (welcome to pay attention to the leverage game)
Written by Zhang Yinyin & Editor | Xin Xinran
In April, the rare negative growth of the increment of social finance attracted much attention.
According to the April 2024 statistical data report on the increase in the scale of social financing released by the central bank, the cumulative increase in the scale of social financing in the first four months of 2024 was 12.73 trillion yuan, 3.04 trillion yuan less than the same period of the previous year.
The increase in social financing in April was -198.7 billion yuan, and the increase in social financing in April 2023 was 1.22 trillion yuan.
From the perspective of social finance, government bonds, corporate bonds and undiscounted bank acceptance bills dragged down the April data. Net financing of government bonds in April increased by 98.4 billion yuan, 553.2 billion yuan less than that in April 2023.
In addition, the PBOC's release of the China Monetary Policy Implementation Report (Q1 2024) (hereinafter referred to as the "Q1 Monetary Policy Report") also has a lot of important information to note.
Let's take a look at the leverage game today with the club friends.
1. Affirmed the monetary policy in the first quarter. The first quarter monetary policy report said at the beginning that the first is to maintain reasonable and abundant liquidity.
For example, at the beginning of the year, the reserve requirement ratio was cut by 0.5 percentage points, releasing more than 1 trillion yuan of medium and long-term liquidity, and comprehensively using tools such as open market operations, medium-term lending facilities, and re-lending and re-discounting to maintain reasonable and abundant liquidity.
It is also necessary to promote the steady decline in financing costs. In February, the market prime rate (LPR) for loans with a maturity of more than 5 years fell by 0.25 percentage points.
Guide the adjustment and optimization of the credit structure. We will set up 500 billion yuan of re-loans for scientific and technological innovation and technological transformation, relax the criteria for identifying inclusive small and micro loans, expand the scope of support tools for carbon emission reduction, and do a good job in the "five major articles" of finance.
I won't say much about maintaining the basic stability of the exchange rate and strengthening risk prevention and mitigation.
Under the above actions, the leverage game noticed that the first quarter monetary policy report said that the effect was gradually emerging. For example, at the end of March, inclusive small and micro loans and medium and long-term loans to the manufacturing industry increased by 20.3% and 26.5% year-on-year respectively, and loans to the private economy increased by 10.7% year-on-year, both exceeding the growth rate of all loans.
Financing costs were stable and declining, with the weighted average interest rate of new corporate loans issued in March at 3.73%, 0.22 percentage points lower than the same period in 2023.
2. The growth rate of residential loans still underperformed the market. In the first quarter of 2024, the phenomenon of credit surge of financial institutions has eased, and the pace of investment has become more balanced while maintaining support for the real economy.
At the end of March, the balance of domestic and foreign currency loans of financial institutions was 251.8 trillion yuan, up 9.2 percent year-on-year and 9.6 trillion yuan more than the beginning of the year. The balance of RMB loans was 247.0 trillion yuan, an increase of 9.6% year-on-year and an increase of 9.5 trillion yuan from the beginning of the year.
Among them, the growth rate of the loan balance of enterprises and institutions was 11.4%.
Specifically, the balance of medium and long-term loans in the manufacturing industry increased by 26.5% year-on-year, 16.9 percentage points higher than the growth rate of all loans. The balance of inclusive small and micro loans increased by 20.3% year-on-year, 10.7 percentage points higher than the growth rate of all loans.
As shown in the chart above, household loan balances grew by only 5.1% – the smallest increase. Of course, this phenomenon is not the first day, and the impact of real estate is too great.
3. The economic growth rate of loans is high, and the economic growth rate of loans is low. The central bank's report specifically mentions the relationship between credit growth and high-quality economic development.
Overall, the relationship between credit growth and economic growth tends to weaken.
For example, in 2023, the average growth rate of loans in one region will be 11.4% and the average GDP growth rate will be 5%, while the average growth rate of loans in another region will only be 3.3%, but the average GDP growth rate will also be 4.8%.
In some provinces, loans grew rapidly, but they did not effectively drive economic growth. There are also some provinces that have supported faster economic development with lower credit growth, and the efficiency of capital use has actually improved.
At present, the mainland's total credit has slowed down from a high growth rate of more than double digits in the past to single digits, but this does not mean that financial support for the real economy has weakened.
First, economic restructuring, transformation and upgrading are accelerating.
On the one hand, the relationship between supply and demand in the real estate market has undergone major changes, and the prevention and control of local debt risks has been strengthened, making it difficult to sustain the debt-driven economic growth model that relied on real estate and local financing platforms in the past. On the other hand, heavy industries, which are traditionally highly dependent on credit funds, tend to be saturated, and the proportion of asset-light services continues to increase.
Second, when the scale of credit stock is relatively large, the marginal effect of continuing to increase credit supply decreases.
4. Loan interest rates continue to fall. The first-quarter monetary policy report said that the weighted average interest rate on loans remained at historically low levels.
In March, the LPR of 1 year and more than 5 years was 3.45% and 3.95% respectively, which was unchanged and down 0.25 percentage points from December of the previous year.
In March, the weighted average interest rate on new loans was 3.99%, down 0.35 percentage points year-on-year.
Among them, the weighted average interest rate of general loans was 4.27%, down 0.26 percentage points year-on-year;
The weighted average interest rate of corporate loans was 3.73%, down 0.22 percentage points year-on-year, and financial support for the real economy continued to increase.
As shown in the figure above, the leverage game adds that the interest rate of personal mortgages has also declined, and the average interest rate is only 3.69%, which is very low, but why do many friends still not buy houses? This question is worth pondering.
In March, 52.81% of general loans had interest rates higher than the LPR, 6.74% of loans with interest rates equal to the LPR, and 40.44% of loans with interest rates lower than the LPR.
5. The growth rate of personal deposits continued to be high. At the end of March, the balance of domestic and foreign currency deposits of financial institutions was 301.4 trillion yuan, an increase of 7.6 percent year-on-year and an increase of 11.5 trillion yuan from the beginning of the year. The balance of RMB deposits was 295.5 trillion yuan, up 7.9% year-on-year and 11.2 trillion yuan from the beginning of the year.
The balance of foreign currency deposits was US$832.6 billion, an increase of US$34.7 billion from the beginning of the year.
As shown in the figure above, in addition to overseas deposits, the highest growth rate of RMB deposits is household deposits.
It's been a similar story for some time. In general, residents love deposits, do not like loans, and do not like loans to buy houses.
From the perspective of "where is the money", deposits are mainly in the resident sector.
At the end of March 2024, residents, enterprises, and governments accounted for 49%, 27%, and 14% of the total deposits of about 296 trillion yuan, up 7.1, 4.2, and 3.3 percentage points respectively from 2019, before the epidemic.
Loans are mainly invested in enterprises, and will be reflected in residents' deposits through various expenditures, but due to the need for residents' consumption to recover and the lack of aggregate demand, the deposits are mainly retained in the residential sector, and are not further converted into corporate deposits through the expenditure of the residential sector.
At the same time, the trend of regularization of deposits by enterprises and residents has intensified. The proportion of time and demand deposits has risen from "June Fourth" in 2017 to "July Three" at present.
6. How will the monetary policy be played next? The Q1 Monetary Policy Report concludes:
The first is to maintain a reasonable growth in financing and monetary aggregates. Reasonably grasp the relationship between the two largest financing markets of bonds and credit, support the accelerated development of direct financing, and continue to promote the development of corporate credit bonds and financial bond markets.
Second, we should give full play to the guiding role of monetary and credit policies. Adhere to the principle of "focusing on key points, being reasonable and moderate, advancing and retreating", maintain the stability of the re-lending and re-discounting policy, make good use of inclusive small and micro loan support tools, implement various special re-lending tools that exist, and promote the implementation and effectiveness of scientific and technological innovation and technological transformation re-lending.
Third, it is necessary to grasp the balance between interest rates and exchange rates. We will further promote the market-oriented reform of interest rates and smooth the transmission channels of monetary policy.
Fourth, we will continue to deepen financial reform and open up to the outside world.
Fifth, actively and prudently prevent and resolve financial risks. We will further improve the macro-prudential policy framework, improve the ability to monitor, assess and warn systemic risks, and enrich the macro-prudential policy toolbox.
To sum up, Leveraged Games believes that in the second or third quarter, it is still important to promote the continued growth of financing and reduce loan interest rates.
The financial charts and graphs not attributed in this article are based on the China Monetary Policy Implementation Report (Q1 2024) and are explained and acknowledged
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