<News Alert> China banking sector: Sep Total Social Financing Rmb 340.7tr, 10.6% y-o-y growth, above expectation
- Sep 2022 outstanding Total Social Financing (TSF) balance increased by 10.6% y-o-y to Rmb 340.7tr. The growth is 0.1ppt higher than that in Aug
- New TSF increment in Sep was reported as Rmb 3.53tn. The increment is Rmb 630bn higher than the same period last year and above the consensus expectation of c.Rmb 2.85tr
- Outstanding balance of Rmb loan to real economy by the end of Sep was Rmb 209.4tr, or 11.1% y-o-y growth. The growth is 0.3ppt higher than that in Aug
- New increment of Rmb loan to real economy in Sep was Rmb 2.47tr. The increment is Rmb 810.8bn higher than the same period last year and above the consensus expectation of c.Rmb 1.85tr.
- We see stronger recovery in credit demand in Sep with the policies to stabilize economy growth gradually taking effect. The new increment in Rmb loan in Sep was nearly doubled than that in Aug and significantly above consensus expectation
- The structure of TSF continues to improve with higher portion of new loans coming from mid-to long term corporate loans. Corporate loan increased by Rmb 1.92tr, of which Rmb 1.35tr is from mid to long term corporate loan.
- However, mortgage demand remains weak though we see marginal recovery in terms of lower drop in new increment than that in Aug. Residential mid to long term loan increased by Rmb 345bn. The increment is Rmb 120bn lower than the same period last year.
- Looking forward, the macro environment is still challenging but we expect government’s stabilizing efforts to gradually take effect. Our house view expects further loosening monetary policy in the rest of the year
- We expect c.11-11.5% y-o-y loan growth in FY22F an achievable target. The strong Sep TSF number is positive to the sector. Our top picks are the oversold but quality China banks like PSBC (1658 HK) and CMB (3968 HK) for the longer term.