China's November loan figures 'roughly in-line'

Mainland banks lent out CNY530b of new loans.

According to Maybank Kim Eng, PBOC announced that mainland banks lent out CNY530b of new loans in Nov12. This is higher than the CNY500b in Oct12 (which was a 13-month low), but is slightly lower than the CNY550b Bloomberg consensus figure. 

Here's more from Maybank Kim Eng:

However, note that few days ago there were mainland media report, suggested that big four banks only lent out CNY168b in Nov12. After that report, market seemed perceived that Nov12 new loans would be only CNY420-480b.

Overall, we believe that the Nov12 new loans figures were roughly in-line.

Analyst comment:
 Nov12 YoY loan growth was 15.7%, a 6-month low, slightly lower than Oct12 (15.9%). But the headline loan growth still exceeded government’s target range of 14.6-15.5%.

 While the new lending figures were lower than Bloomberg consensus, we are comfortable with the overall situation. Mainland banks are usually more cautious in lending towards year end when loan target is largely achieved.

 For Jan-Nov12, mainland banks lent out an aggregate of CNY7.7t of new loans, 13% higher than the CNY6.8t in Jan-Nov11,. Compared to the whole year target of CNY8-8.5t, the achievement ratio was 91-96%, similar to previous years.

 The mainland banks should be able to meet mid-end of CNY8-8.5t new loans target for FY12 if the YoY growth pace maintained. There should be not much risk for individual banks’ target loan growth.

 M2 balance increased by CNY840b during Nov12, reversing the trend in Oct12.

 Nov12 M2 growth was 13.9%, lower than the market consensus of 14.1%, and the rate is also slightly below than PBOC’s target of 14% YoY. M2 growth has shown signs of deceleration since Sep12.  

 During Nov12 CNY deposit balance rose by CNY480b after dropping in Oct12, similar to what we usually saw in previous Novembers. The CNY deposit growth of 13.4% in Nov12 was also the highest YTD.

 We expect PBOC’s monetary policies to stay neutral in short term, ie we expect no movement in reserve requirement ratio (RRR) and benchmark interest rate.

 China government may soon release its target for FY13 loan growth and M2 growth. We believe that the target new loans for FY13E would be around  CNY8.5t, slightly higher than FY12. But the target loan growth will be only 13.5%, lower than this year.