<News Alert> China Banking Sector: Aug Total Social Financing Rmb 337.2tr, 10.5% y-o-y growth
- Aug 2022 outstanding Total Social Financing (TSF) balance increased by 10.5% y-o-y to Rmb 337.2tr. The growth is 0.2ppt lower than that in Jul.
- New TSF increment in Aug was reported as Rmb 2.43tn. The increment is Rmb 557bn lower than the same period last year, but slightly higher than the consensus expectation of c.Rmb 2.13tr and significant higher than the new increment in Jul of Rmb 756bn.
- Outstanding balance of Rmb loan to real economy by the end of Aug was Rmb 206.8tr, or 10.8% y-o-y growth. The growth is 0.1ppt lower than that in Jul.
- New increment of Rmb loan to real economy in Aug was Rmb 1.33tr. The increment is Rmb 63.1bn higher than the same period last year and slightly lower than the consensus expectation of c.Rmb 1.42tr.
- Following a weak Jul TSF and RMB loan increment number, we saw some recovery signs in Aug. Corporate loan increased by Rmb 875bn and the increment is higher than the same period last year. Mid to long term corporate loan is also showing a recovery trend.
- However, mortgage was still weak. Residential mid to long term loan increased by Rmb 265.8bn. The increment is Rmb 160bn lower than the same period last year.
- Looking forward, the macro environment is still challenging but we expect government’s stabilizing efforts will gradually take effect. The Aug data has not yet factored in the 15bps cut in 5-yr LPR, which may help with the mortgage volume recovery. Our house view expects further loosening monetary policy in the rest of the year.
- We now expect 10-11% y-o-y loan growth in FY22, compared with 11-12% previously. We maintain our neutral view on the sector and prefer HK banks at the time being with top pick as BOCHK (2388 HK). Still, we pick the oversold but quality China banks like PSBC (1658 HK) and CMB (3968 HK) for the longer term.