Group 1 - The People's Bank of China reported that as of the end of July, the broad money supply (M2) was 329.94 trillion yuan, an 8.8% year-on-year increase, indicating a moderately loose monetary policy that supports the real economy [1] - The total social financing stock reached 431.26 trillion yuan, with a year-on-year growth of 9%, reflecting a stable financing environment [1] - The RMB loan balance was 268.51 trillion yuan, showing a year-on-year increase of 6.9%, which is significantly higher than the nominal economic growth rate [1][3] Group 2 - Seasonal fluctuations in credit data were noted, with July typically being a "small month" for credit, as many banks tend to front-load lending in June [2] - The analysis of loan data should consider cumulative growth and balance growth rates, as July's loan balance growth of 6.9% remains robust [2] - The impact of local government debt replacement on loan data was significant, with estimates suggesting that after adjusting for this factor, the loan growth rate could be close to 8% [3][5] Group 3 - The narrow money supply (M1) was reported at 111.06 trillion yuan, with a year-on-year growth of 5.6%, indicating improved liquidity and efficiency in fund circulation [4] - The narrowing gap between M1 and M2 suggests enhanced fund activation and market confidence, aligning with economic recovery trends [4] - Factors such as local debt replacement and the diversification of financing channels are contributing to the growth in loans [4] Group 4 - The average interest rates for new corporate loans and personal housing loans were approximately 3.2% and 3.1%, respectively, reflecting a decrease of about 45 and 30 basis points year-on-year [7][8] - The reduction in financing costs has positively impacted business operations, with many companies reporting significant savings on interest rates [7][8] - The overall financing demand satisfaction is high, supported by a series of policies that enhance the smooth operation of interest rates [8]

Report Industry Investment Rating No relevant information provided. Core Viewpoints of the Report - Despite the slow credit growth during the local government implicit debt replacement phase, it doesn't mean a decline in credit support for the real economy; instead, it benefits economic growth. The new policy - type financial tool is a trump card for promoting credit, and there's no need to be pessimistic about future credit growth. Credit growth isn't necessarily better the more it is, and an appropriate decline in credit growth is normal during economic restructuring and the increase of direct financing ratio. Considering various factors, a credit growth rate of about 7.5% for state - owned large - scale banks is satisfactory [1][3][4]. Summary by Related Contents Credit Growth in May 2025 - In May 2025, new RMB loans were 62 billion yuan, 34 billion yuan more than in April and 33 billion yuan less than the same period last year. Local government implicit debt replacement is one of the factors affecting May's credit growth [1][9]. Impact of Debt Replacement on Credit - Local government implicit debt replacement uses low - cost, long - term local government bonds to replace high - cost, short - remaining - term debts, which helps relieve the debt chain, benefiting economic growth. During this phase, slow credit growth doesn't mean a decline in credit support for the real economy [1][9]. Weakening of Effective Demand - The weakening of effective demand is mainly due to external shocks such as US tariff policies. Economic data reflects this, like the domestic manufacturing PMI in April and May 2025 being 49.0% and 49.5% respectively, lower than the Q1 average of 49.9%, and the PPI year - on - year growth rates in April and May being - 2.7% and - 3.3% respectively, lower than the Q1 average of - 2.3% [1][9]. Historical Experience of Policy Intervention - Similar external shocks have been experienced in the past. As long as policies respond actively, credit support for the real economy won't weaken and may even strengthen. For example, in 2020 and 2022, affected by the COVID - 19 pandemic, RMB loans increased by 19.6 trillion and 21.3 trillion yuan respectively, 2.8 trillion and 1.4 trillion yuan more than the previous years. New regulatory tools were introduced, like the policy - based and development - oriented financial tools in 2022, which injected 740 billion yuan into real - sector enterprises by the end of October, stimulating more effective credit demand [2][11][13]. New Policy - Type Financial Tool - The Politburo meeting on April 25, 2025, called for the establishment of a new policy - type financial tool. Assuming an average project capital ratio of 20%, every 500 billion yuan of this tool can theoretically leverage 2 trillion yuan of credit funds, making it a trump card for promoting credit [3][13]. Issues with Excessive Credit Growth - Financial institutions' "scale complex" leads to "involution - style competition" in the deposit and loan markets. Excessive credit growth through loan "price wars" sacrifices the sustainability of banks' support for the real economy and the banks' operational stability, and provides a breeding ground for capital idling and arbitrage [3][13]. Appropriate Credit Growth Rate - During economic restructuring and the increase of direct financing ratio, an appropriate decline in credit growth is normal. Considering factors like the GDP growth target of about 5% and CPI growth target of about 2% this year, a credit growth rate of about 7.5% for state - owned large - scale banks is satisfactory [4][14].