<News Alert> China Banking Sector: May Total Social Financing Rmb 329tr or 10.5% y-o-y growth, higher than expected
What’s new
- May 2022 outstanding Total Social Financing (TSF) balance increased by 10.5% y-o-y to Rmb 329.19tr. The growth is 0.3ppt higher than that in Apr.
- New TSF increment in May was reported as Rmb 2.79tr. The increment is Rmb 839.9bn higher than the same period last year and higher than the consensus expectation of c.Rmb 2.03tr.
- Outstanding balance of Rmb loan to real economy by the end of May was Rmb 202tr, or 10.9% y-o-y growth.
- New increment of Rmb loan to real economy in May was Rmb 1.89tr. The increment is Rmb 393.6bn higher than the same period last year and higher than the consensus expectation of c.Rmb 1.22tr.
- The Rmb retail loan increased by Rmb 288.8bn. The increment is Rmb 33.4bn less than the same period last year.
Our view
- With the loosening monetary policy and Shanghai gradually back to normal from the lock-down, the credit environment is showing positive signals after disappointing data in Apr.
- The retail loan increment remains lower than corporate side this month with a weak property market and mortgage demand.
- Banks will continue to see downward NIM pressure in the current environment, while we maintain the steady loan growth outlook of over 11% y-o-y unchanged for FY22F with further loosening policies expected and economy recovery in 2H22. Our house view expects another 100bps RRR cut and 20bps of 1-yr LPR cut by the end of this year.
- Expect positive impact on the share performance of China banking sector as concerns on lagged loan growth would be removed to some extent. Our top pick remains as PSBC (1658 HK).