RMB loan growth in China banks surges to CNY1.1t MoM in June

Thanks to firm RMB deposit growth.

RMB loan growth in China banks accelerated to CNY1.1t MoM in June 2014, which was in line with strong RMB deposit growth (+CNY3.8t MoM in June 2014).

According to a research note from Maybank Kim Eng, growth in short-term individual loans (proxy of micro-finance) strengthened in 2Q14 (+CNY360b QoQ).

Meanwhile, the softening in SHIBOR helped revive the bill finance business in 2Q14 (+CNY319b QoQ).

Also, The RMB loan-to-deposit (L/D) ratio fell to 68.3% in June 2014 (68.7% in May 2014).

Here's more from Maybank Kim Eng:

We expect steady loan growth and NIM for most H-share banks in 2014.

Total aggregate financing rebounded to CNY2t in June 2014 (CNY1.4t in May 2014), partly due to a slight recovery in entrusted loans and bankers’ acceptance.

Following the launch of Document No. 140, H-share banks should moderate their growth in shadow bank assets in 2014.

Maintain OVERWEIGHT. We see a 7-17% EPS CAGR for H-share banks in 2013-2016 under our conservative assumptions on NPLs and provisions.