<News Alert> Jun Total Social Financing Rmb 334.3tr or 10.8% y-o-y growth, higher than expected
- Jun 2022 outstanding Total Social Financing (TSF) balance increased by 10.8% y-o-y to Rmb 334.27bn. The growth is 0.3ppt higher than that in May.
- New TSF increment in Jun was reported as Rmb 5.17tr. The increment is Rmb 1.47bn higher than the same period last year and higher than the consensus expectation of c.Rmb 4.65tr.
- Outstanding balance of Rmb loan to real economy by the end of Jun was Rmb 205tr, or 11.1% y-o-y growth.
- New increment of Rmb loan to real economy in Jun was Rmb 2.70tr. The increment is Rmb 632.9bn higher than the same period last year and higher than the consensus expectation of c.Rmb 2.44tr.
- The Rmb retail loan increased by Rmb 2.18tr in 1H22, the increment is Rmb 2.40tr less than the same period last year. The Rmb corporate loan increased by Rmb 11.4tr in 1H, the increment is Rmb 3.03tr more than the same period last year.
- With the loosening monetary policy and the society gradually back to normal from the lock-down, the credit environment improved at an accelerated pace.
- The strong corporate loan increment indicates recovery of enterprise production capacity that has been suppressed earlier this year, which is expected to drive the recovery of domestic 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 with positive signals on gradual economy recovery. Our top picks are PSBC (1658 HK) and CMB (3968 HK).