Economic Rebound and Central Bank's RRR Cut
The world's second-largest Chinese economy bounced back from pandemic disruptions driven by consumption and infrastructure. In March, the central bank cut banks' reserve requirement ratio (RRR) for the first time this year to stimulate credit growth.
Record Bank Loans Amid Front-loaded Lending
Bank loans in the first quarter reached a record 10.6 trillion yuan ($1.54 trillion), a 27% increase from Q1 2022 due to front-loaded lending and the RRR cut.
Surpassing Analysts' Expectations in March
In March, new yuan loans totaled 3.89 trillion yuan, more than double February's amount and exceeding analysts' predictions, according to data from the People's Bank of China.
Concerns Over Fading Momentum
Despite Beijing's zero-COVID policy lift in December and other measures, there are worries that credit demand momentum could weaken.
Strong Rebound Expected in Coming Quarters
The credit impulse in Q1 suggests a strong rebound in growth in the upcoming quarters, according to Zhang Zhiwei, the chief economist at Pinpoint Asset Management.
The Surge in Household and Corporate Loans
Household loans, mostly mortgages, rose to 1.24 trillion yuan in March, while corporate loans increased to 2.7 trillion yuan.
Deposit Rate Reductions Amid Rising Economic Risks
Some small and mid-sized Chinese banks have reduced their deposit rates, potentially easing costs as loan growth faces increased pressure due to rising economic risks.
Steady M2 Money Supply Growth
Broad M2 money supply grew 12.7% in March from a year earlier, in line with Reuters poll estimates, while outstanding yuan loans grew 11.8% in the same period.
Quickening Total Social Financing Growth
Outstanding total social financing (TSF) grew 10% in March from a year earlier, faster than February's 9.9% growth. TSF encompasses off-balance sheet financing forms, such as IPOs, loans from trust companies, and bond sales. TSF increased to 5.38 trillion yuan in March, surpassing Reuters' poll expectations.