Core Viewpoint - The social financing (社融) in July increased by 1.16 trillion yuan, which is below the market average expectation of 1.41 trillion yuan, but shows a year-on-year increase of 389.3 billion yuan. The stock growth rate of social financing is 9.0%, up by 0.1 percentage points from the previous month [1][6]. Summary by Sections Social Financing and Credit - The decrease in real credit amounted to 426.3 billion yuan, which is a year-on-year reduction of 345.5 billion yuan. This aligns with the decline in bill rates and the BCI (Business Climate Index) reflecting a weaker financing environment for enterprises [1][7]. - Factors contributing to the decline in real credit include seasonal variations in credit issuance, a tightening of production and capital expenditures by some enterprises due to "anti-involution" policies, and improved cash flow for SMEs following the implementation of regulations to clear overdue payments [1][7]. Government and Corporate Financing - Government bond financing increased by 1.2 trillion yuan, a year-on-year increase of 555.9 billion yuan, reflecting active fiscal policies and a low base from the previous year. However, the base for government bonds will significantly increase starting in August, potentially shifting the impact from support to a drag on social financing [2][10]. - Corporate bond financing increased by 279.1 billion yuan, a year-on-year increase of 75.5 billion yuan, primarily due to a relatively loose liquidity environment and low financing costs for credit bonds [2][10]. Currency and Monetary Indicators - Foreign currency loans decreased by 8.6 billion yuan, a year-on-year reduction of 80.4 billion yuan, indicating a generally positive expectation for exchange rates among enterprises [3][11]. - M1 growth rate was 5.6%, up by 1.0 percentage points from the previous month, influenced by factors such as low base effects and increased net fiscal spending on the real economy [3][12]. - M2 growth rate was 8.8%, up by 0.5 percentage points, primarily driven by accelerated net fiscal spending on the real economy. There is a notable trend of residents moving deposits to non-bank financial institutions [4][13]. Overall Economic Outlook - The divergence between credit data and M1 growth suggests that both indicators may reflect macroeconomic conditions with some distortion. The low credit data in July raises the probability of monetary and financial policies stabilizing financing demand and promoting data recovery [5][14]. - The BCI for July was reported at 46.09, down from 49.12, indicating a deteriorating financing environment for enterprises [8].

Investment Rating - The report maintains a "Recommendation" rating for the banking industry [1] Core Insights - The report highlights a decline in bill rates and emphasizes the importance of large maturing certificates of deposit [5][11] - It notes that the net buying volume of bills by state-owned banks has increased compared to the same period last year, while city commercial banks have seen a significant rebound in net selling [5][11] - The report anticipates a challenging funding environment in June due to substantial maturities of certificates of deposit and reverse repos [5][12] Industry Scale - The banking industry comprises 41 listed companies, with a total market capitalization of 991.12 billion and a circulating market capitalization of 981.93 billion [1] Bill Market Analysis - As of May 30, 2025, the 1-month, 3-month, and 6-month bill rates were 1.1%, 1.16%, and 1.06%, reflecting changes of -8 basis points, +7 basis points, and -3 basis points respectively [11][19] - The cumulative net buying scale of bills for state-owned banks, joint-stock banks, city commercial banks, and rural commercial banks was 15,370.18 billion, 814.94 billion, 3,881.66 billion, and 7,057.95 billion respectively [11][19] Monetary Policy - The central bank conducted a total of 16,026 billion in 7-day reverse repos, achieving a net injection of 6,566 billion [12][33] - The report indicates that the central bank's reverse repo balance has significantly increased compared to historical levels [12][36] Funding Rates - The report states that the funding rates for DR001, DR007, and DR014 were 1.48%, 1.66%, and 1.72% respectively, with slight fluctuations noted [13][38] - It is expected that funding rates may decline in the upcoming period, although various factors could complicate the funding landscape in June [13][18] Government Debt Financing - The report mentions that the government debt net financing for the week was 5,141.04 billion, with expectations for a slight decrease in net payments in the following period [14][38] Certificates of Deposit - The report highlights that June will see a record maturity of over 40,784 billion in certificates of deposit, the largest single-month maturity in history [16][18] - The large maturities are attributed to various factors, including tighter funding conditions in Q1 2025 and regulatory influences [16][18]