event:
On December 9, 2021, the central bank released the financial statistics for November:
(1) M2 increased by 8.5% year-on-year, down 0.2 percentage points from October;
(2) M1 increased by 3% year-on-year, 0.2 percentage points higher than that in October;
(3) RMB loans increased by 1.27 trillion, a year-on-year decrease of 160.5 billion, with a growth rate of 11.7%;
(4) The scale of social financing increased by 2.61 trillion, a year-on-year increase of 478.6 billion, and the growth rate of social financing was 10.1%, 0.1 percentage point higher than that in October.
comment:
1、 New loans in November were lower than market expectations for three reasons
In November 2021, RMB loans increased by 1.27 trillion, a year-on-year decrease of 160.5 billion, which is generally lower than the market expectation of 1.5-1.6 trillion. We believe that the main reasons for this situation are as follows:
First, macroeconomic and market players are under significant pressure, and banks are facing the dilemma of "asset shortage". Recently, the sporadic impact of the epidemic and the increasing pressure on the cash flow of real estate enterprises have put great pressure on the upstream and downstream small and medium-sized enterprises represented by the real estate industry chain. Enterprises have difficulties in survival, deteriorating business expectations, insufficient capital expenditure, the business vitality of some enterprises has decreased, and the requirements to ensure the stability of market players have been improved. At the same time, near the end of the year, the start-up of infrastructure is insufficient, the allocation of financial funds lags behind, the pressure of energy supply and demand remains, and the supply and demand sides of infrastructure investment are still squeezed. Therefore, banks are facing a certain dilemma of "asset shortage" in public credit, and there is a lack of desirable project reserves, which may have an impact on the "good start" next year. Data show that in November, corporate long-term loans increased by 341.7 billion, a year-on-year decrease of 247 billion, accounting for 26.91%, basically the same as that in October, but significantly lower than the level of 35-50% in the first three quarters.
Second, the financial risk of retail long tail customers increased, and the growth of non mortgage loans was lower than expected. From January to November this year, residents' short-term loans increased by 1.82 trillion, basically the same year-on-year. From July to November, they increased by 674.3 billion, a year-on-year decrease of 376.3 billion. This has both base factor and new business situation change factor. On the one hand, after the covid-19 epidemic was effectively controlled last year, there was a demand for centralized release of consumer loans, resulting in a high growth base in the second half of last year. On the other hand, since the fourth quarter of this year, the operating pressure of small and medium-sized enterprises has increased, and the settlement of construction enterprises has slowed down, which has had a certain impact on the long tail customer base. It is observed that the overdue rate of joint loans has increased significantly in recent two months, reflecting the release of the risk of high-risk long tail customers, which reflects the potential pressure on income and employment of flexible employment groups, employees of small and micro enterprises and migrant workers. Squeezed by joint loans, it is estimated that the growth of retail non mortgage loans of small and medium-sized banks slowed down in November, and the credit supply also tended to be cautious. Third, the rapid adjustment of the real estate market has also impacted the consumption mentality of residents to a certain extent.
Third, the credit supply of small and medium-sized banks is unstable and uncertain. Since November, the institutional differentiation of credit supply has been more obvious. Among them, large state-owned banks played the "head goose effect", the growth of mortgage loans was good, although the credit supply of joint-stock banks still increased less year-on-year, it was improved compared with October, and some bank corporate loans "changed from negative to positive" in November, while retail non mortgage loans maintained a certain boom. The demand of small and medium-sized banks in economically developed provinces such as Jiangsu and Zhejiang is relatively stable. We speculate that the year-on-year decrease in New RMB loans in November may be related to the weak credit demand of small and medium-sized banks and agricultural related institutions. The customer base of these banks is relatively weak, greatly disturbed by external factors, and the unstable customer base makes the credit supply unstable and uncertain.
Overall, the slight increase in loans in November was based on the slowdown of economic growth, which is consistent with the new downward pressure on the economy at the current stage, and also confirms the necessity and urgency of reducing the deposit reserve ratio in December.
2、 In November, the momentum of short-term corporate loans + virtual increase in bills remained unchanged, and the increase in bill financing continued in December
In November, while the total amount of new credit increased less year-on-year, the structure still performed poorly. "Corporate short-term loans + bill financing" increased by 20.5 billion, an increase of 47.7 billion year-on-year, of which bill financing increased by 80.1 billion year-on-year. In November, the bill interest rate decreased significantly, with a decrease of nearly 100bp in the last week. Medium - and long-term corporate loans decreased by 247 billion year-on-year.
From the structural point of view, the growth of corporate loans is still dominated by short-term loans, with a certain false increase. The investment of medium and long-term loans is weak. The investment is mainly focused on large state-owned enterprises and energy industry, and the risk appetite is still cautious. As a result, corporate loans are prone to negative growth within the month after the next month, which is reflected in September, October and November.
Since December, there has been a sharp decline in the transfer interest rate of silver notes of state shares above 1m. Among them, the interest rate of 1m inter year varieties has dropped to about 0.3%, further downward compared with the end of November. The reason behind this cannot be ruled out because the credit supply data in November was weak. In order to ensure the stability of credit growth in December, the central bank guided financial institutions to increase credit supply in advance. On the other hand, the bank's winter savings project is more expected to be used for the "good start" launch next year, and the increased demand for ticket collection is more to meet the needs of MPA credit launch assessment this year.
3、 Mortgage loans continue to "increase in volume and decrease in price", and development loans have not fully "surfaced", but they can be expected in the future
In November, the growth boom of mortgage loans further recovered, and residents' medium and long-term loans increased by 582.1 billion, an increase of 77.2 billion year-on-year, accounting for 45.83%, an increase of 10.53 percentage points year-on-year. According to the previous report of Shanghai Securities News, "on the basis of the sharp recovery in October, the investment in real estate loans in November continued to maintain the trend of double growth month on month and year-on-year, and it is preliminarily expected to increase by about 200 billion yuan year-on-year". The financial data in November also confirmed this data to a certain extent.
We believe that the follow-up mortgage loans will continue the pattern of "volume increase and price decrease". By guiding the release of mortgage loans, we can stabilize the sales collection of real estate enterprises, alleviate the pressure of cash flow, enhance the sustainable operation ability of enterprises, and slow down the operational debt risk of upstream and downstream industrial chains. In this case, the growth of mortgage loans in December is expected to further improve. In the next stage, the stable sales of real estate will be put on the agenda. It is not ruled out that more means will appear to promote the restorative growth of sales.
In terms of development loans, since April this year, the monthly net increase of development loans has continued to show negative growth, and the year-on-year growth rate of balance is close to 0. Despite the early market rumors that the regulatory requirements for development loans "surfaced", at present, the bank's risk preference has not been completely reversed. The investment field prefers high-quality regions, high-quality companies and high-quality projects. The investment of development loans requires full coverage of project cash flow on the basis of meeting "432", and strengthens the supervision of closed funds. We believe that it still takes some time for development loans to recover significantly, but they are evolving to the good. There is a strong certainty that subsequent development loans will become positive and the growth rate will pick up. However, in the process of loose policy transmission, real estate enterprises will still feel the "uneven hot and cold" financing conditions.
4、 In November, the growth rate of social finance hit the bottom and rebounded, and there was a "seesaw" effect on medium and long-term corporate loans and bond issuance
In November, social finance increased by 2.61 trillion, an increase of 478.6 billion year-on-year. The year-on-year growth rate of social finance stock was 10.1%, 0.1 percentage point higher than that in October. In terms of structure, the sub items of on balance sheet financing, non-standard and government bonds basically meet the market expectations. The itemized fluctuations that need to be focused on are mainly corporate bonds. Data show that the net financing scale of corporate bonds in November was 410.4 billion, an increase of 326.4 billion year-on-year, the largest increase in a single month since this year. In terms of split items: in November, the net financing of corporate bonds + corporate bonds was 81.8 billion, a year-on-year decrease of about 71 billion. The net financing of zhongpiao + CP + SCP was 19.6 billion, an increase of 384.7 billion year-on-year. Among them, the net financing of ultra short financing was 108.9 billion, an increase of about 280 billion year-on-year, which was the main reason for the increase of net financing of corporate bonds year-on-year. Compared with the data of medium and long-term loans (a year-on-year decrease of 247 billion) and net financing of corporate bonds (a year-on-year increase of 326.4 billion) in November, they show a "seesaw" effect.
SCP financing increased significantly year-on-year, which is related to the base effect of the withdrawal of arbitrage funds in the same period last year to a certain extent. However, it should also be noted that at this stage, we still need to prevent inter-bank arbitrage of enterprises in the low interest rate environment. For example, through short-term loans with strong short-term liquidity or SCP with weak capital use supervision, purchase financial products such as structured deposits of small and medium-sized banks. Although this behavior was somewhat squeezed in the second half of last year, due to the low loan interest rate, bond interest rate and bill interest rate of high-quality enterprises, it is not ruled out to regenerate arbitrage transactions, resulting in a virtual increase in the balance sheet of the financial system.
For the growth rate of social finance in December, We judge that: (1) under the MPA assessment and the guidance of the central bank, the on balance sheet financing is expected to recover in December, and the new scale will remain at 1.3-1.4 trillion. (2) the net financing of government bonds will remain high in December, and the scale is expected to be about 900 billion. (3) December is the big month of traditional loan write off, and the scale of loan write off + ABS is expected to be about 400 billion. Based on the above analysis, it is expected that the new social finance scale in December will be about 2.4 trillion, the new scale in the whole year will be 30-31 trillion, and the growth rate in December will further rise to about 10.3-10.5%.
5、 The sharp decline in non bank deposits helped M2 growth, and the scissors difference between M2 and M1 narrowed
In November, M2 increased by 8.5% year-on-year, down 0.2 percentage points from October. Structurally, General deposit (corporate + retail) increased by 1.68 trillion, an increase of 194.2 billion year-on-year. Fiscal deposits increased by - 728.1 billion, an increase of 542.4 billion year-on-year, reflecting an increase in fiscal expenditure. Non bank deposits increased by - 25.7 billion, an increase of 877.3 billion year-on-year, which was the main reason for the decline of M2 year-on-year growth. After excluding the factors of non bank deposits, M2 year-on-year growth in November was 8.9%, an increase of 0.2 percentage points over October 。
There are two main reasons for the sharp year-on-year decline of non bank deposits in November: first, the base was high in November last year. Affected by the credit default events of Yongmei, Ziguang and other enterprises, the central bank strengthened the open market operation in order to stabilize liquidity and market expectations, resulting in abundant liquidity of non bank institutions. In November this year, the liquidity was generally stable, but near the end of November, the capital was tightened periodically, and the treasurer was relatively cautious. Second, the market liquidity was relatively loose in October, resulting in a large increase in non bank deposits in that month. If we comprehensively consider the growth of non bank deposits from October to November, it is not difficult to see that the new scale of non bank deposits from October to November this year was 1.21 trillion, with little change year-on-year.
The year-on-year growth rate of M1 in November was 3%, up 0.2 percentage points from October, ending the continuous downward trend since January this year. The growth scissors difference between M2 and M1 was 5.5%, 0.4 percentage points narrower than that in October.
In fact, the continued decline of M1 growth rate and the expansion of the scissors difference between M2 and M1 growth rate since this year not only have the impact of the monthly increase of the base last year, but also can reflect the cash flow pressure of real estate enterprises caused by the shrinkage of various financing channels. With the recent improvement of real estate financing situation, various types of financing represented by mortgage loans were marginally improved in November, which helped to stabilize the bottom of M1. Of course, it should be pointed out that in view of the strict supervision of restricted funds, the improvement of M1 growth rate and the difference in available funds at the level of real estate enterprise groups, it is still difficult for some weak qualified subject groups to co-ordinate funds.
For the subsequent M1 trend, we believe that: on the one hand, the macro economy in Q4 was still in a good trend last year, M1 maintained a high growth rate and a high base effect; On the other hand, the current policy has increased the support for on balance sheet housing related loans, which is conducive to the recovery of sales receipts. However, sales receipts may enter the restricted closed fund management. Therefore, enterprises do not have much funds available, and greater relaxation is needed to avoid the pressure infection of cash flow fracture. Based on the base effect of last year and the current real estate market regulation policies, the subsequent M1 growth rate may have a slight marginal improvement, but the space is relatively limited.
6、 Investment advice
Although the scale of credit supply in November showed a slight increase year-on-year, we are still optimistic about the future credit and bank stocks for three main reasons:
First, the real estate financing environment has gradually improved, and the market pessimism is being repaired. After the recent Evergrande credit default event, the regulatory authorities took many measures and made an intensive voice, aiming to stabilize market expectations, avoid the active "lying flat" and moral hazard of real estate enterprises through the strategy of "dealing with one and warning one", and orderly repair the damaged financing environment of the real estate market. From the press release of the Politburo meeting, it was proposed to "promote the construction of affordable housing, support the commercial housing market, better meet the reasonable housing needs of buyers, and promote the healthy development and virtuous cycle of the real estate industry", which released the signal of maintaining the stability of the real estate market, improved the market risk appetite, and did not rule out the introduction of further stable sales measures. Considering that the adjustment of the banking sector in the early stage is mainly disturbed by the real estate credit risk, and with the improvement of the financing situation in the real estate market, the more pessimistic mood has been repaired, which will be conducive to the performance of bank stocks.
Second, the credit boom is expected to recover in December, and the credit relief efforts are gradually increased. In recent months, the central bank has repeatedly stressed "enhancing the stability of total credit growth", successively launched targeted support tools such as carbon emission reduction support tools, small refinancing for agricultural support and regional stability refinancing, and reduced the interest rate of small refinancing for agricultural support. At the same time, the high-frequency window guides banks to increase credit, and guides new credit to increase year-on-year through MPa assessment and adjustment, focusing on supporting manufacturing, inclusive small and micro enterprises, green industry and other fields. In addition, the real estate financing package support policy is being gradually promoted, and the consensus of mortgage loans is high. It is expected to continue the "month on month increase and year-on-year increase". The negative growth trend of development loans is expected to be reversed to some extent, which will help real estate enterprises further restore their sustainable operation ability. At the same time, by relaxing ABS, bond issuance and other channels, support the M & A financing of real estate enterprises and promote the normal commencement and operation of real estate projects. Therefore, we expect that the credit boom will pick up in December, and the promotion of credit easing will be further strengthened, which will be conducive to the performance of banks.
Third, the RRR reduction helps to improve the debt cost of the banking system and the pressure on liquidity regulatory indicators. Due to the abundant expectation and understanding of the RRR reduction in December, the disturbance to bank stocks is relatively limited, which is different from that in July. On the contrary, the introduction of the RRR reduction policy not only helps to improve the cost of liabilities in the banking market and stabilize NIM, but also improves the safety space of liquidity regulatory indicators such as LCR and nsfr, and increases the "scale of loanable funds", so as to enhance the willingness of banks to extend credit.
Based on the above analysis, under the action of the triple factors of "improvement of real estate financing situation + promotion of wide credit + release of standard reduction dividend", we are generally optimistic about the performance of follow-up bank stocks, focusing on the head joint-stock banks with sufficient early adjustment and high-quality urban rural commercial banks in Jiangsu.
7、 Risk tips
Wide credit intensity
