Credit provision is muted in September

Latest reading: In September, Chinese banks distributed CNY 1590 billion in new yuan loans, up from August’s 900 billion figure but below market expectations. Money supply rose 6.8% year on year in September (August: +6.3% yoy). Finally, the stock of total social financing (TSF) – a broader measure of credit and liquidity in the economy that includes loans, bonds and other non-traditional instruments – increased 8.0% in the month (August: 8.1% yoy). The latest data is reflective of subdued demand in the economy, as well as the government’s regulatory push to fix artificially inflated loan data.

Panelist insight: Digging deeper into the latest data, Nomura analysts said: “Stronger-than-usual bill financing and weaker-than-usual corporate bond financing suggest real credit demand was still quite weak in September, appearing to be consistent with the disappointing data in inflation and exports. Government bond remains a major driver, as its net financing contributed slightly more than 40% of overall credit extension in September.”

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