What’s new
- By the end of Jun 2023, outstanding Total Social Financing (TSF) balance increased by 9% y-o-y to Rmb 365.45tr
- New TSF increment in Jun 2023 was reported as Rmb 4.22tr, above consensus expectation of c.Rmb 3.2tr
- Outstanding balance of Rmb loan to real economy by the end of Jun 2023 was Rmb 228.9tr, representing 11.2% y-o-y growth. The growth is 0.1ppt lower vs that in May
- New increment of Rmb loan to real economy in June was Rmb 3.05tr, above consensus expectation of c.Rmb 2.38tr
Our view
- Following a weak Apr and May credit data, Jun TSF saw a better-than-expected growth, which is overall positive for China banking sector especially at current undemanding valuation level of c.0.3x forward P/B
- Residential loan in 1H23 increased by c.Rmb 2.8tr, of which Rmb 1.46tr is from mid-to-long term loans, indicating a stabilization trend of mortgage growth even with the early repayment trend
- Looking forward, we maintain our cautiously positive outlook on credit demand recovery in FY23F, driven by 1) economy recovery with China GDP expected to grow c.5% in FY23F; and 2) sustain loosening of monetary policy with LPR cut of 10bps in June and likely another 10bps in 3Q23
- We expect c.12% y-o-y loan growth in FY23F. Our top picks for long-term remains as PSBC (1658 HK), as well as CCB (939 HK) among Big Four
