<News Alert> Apr Total Social Financing Rmb 326tr or 10.2% y-o-y growth, lower than expectation
What’s new
- Apr 2022 outstanding Total Social Financing (TSF) balance increased by 10.2% y-o-y to Rmb 326tr. The growth is 0.4ppt lower than that in Mar and lower than expectation.
- New TSF increment in Apr was reported as Rmb 910.2bn. The increment is Rmb 946.8bn lower than the same period last year. And it is significantly lower than consensus expectation of c.Rmb 2tr.
- Rmb loan is the major negative contributor of New TSF increment. New increment in Rmb Loan in Apr was Rmb 361.6bn. The increment is Rmb 922.4bn lower on a y-o-y basis.
- Among Rmb loan balance, retail loans dropped by Rmb 217bn, among which mortgage dropped by Rmb 60.5bn and other consumption loans dropped by Rmb 104.4bn. Corporate loan balance increased by Rmb 578.4bn.
Our View:
- Macroeconomy environment remains challenging in China, with the negative impact from lock-down measures began to show in the 2Q number.
- Meanwhile, we expect more loosening and stimulus policies from government to support credit demand and loan growth. As PBOC mentioned to further lower down corporates’ financing costs ans has announced to cut first-home mortgage rate by 20bps, we expect another LPR cut in May.
- Banks will continue to see downward NIM pressure in the current environment, while we maintain the steady loan growth outlook unchanged for FY22F with further loosening policies expected and economy recovery in 2H22.
- Expect short-term share price pressure in China banking sector, though the long-term positive view is unchanged.