1. Report's Industry Investment Rating - Not provided in the given content 2. Report's Core Views - **Stock Index**: Due to increased intensity between the US and Iran, decreased market liquidity and risk appetite, and the indication from the MACD indicator, the stock index is expected to face pressure and move in a range - bound and weak - oscillating manner [11]. - **Treasury Bonds**: Despite the continuous decline of risk assets, it has not stimulated the improvement of sentiment in the ultra - long end. The steepened yield curve may continue due to unfriendly fundamental factors and geopolitical factors. Treasury bonds are expected to oscillate [12]. 3. Summary by Relevant Catalogs Financial Futures Strategy Suggestions Stock Index Strategy - **Trend Review**: Most stocks fell, with nearly 4,800 stocks declining in the Shanghai, Shenzhen, and Beijing stock markets [11]. - **Core View**: Geopolitical tensions between the US and Iran, along with relevant policies and economic data, may cause the stock index to face pressure. The MACD indicator shows a possible weak - oscillating trend for the market index [11]. - **Strategy Outlook**: Range - bound oscillation [11]. Treasury Bond Strategy - **Trend Review**: The main contracts of 2 - year, 5 - year, 10 - year, and 30 - year treasury bond futures all declined [12]. - **Core View**: Institutions are more interested in the medium - short end, and the steepened curve may continue due to unfriendly fundamentals and geopolitical factors. The MACD indicator shows that the T main contract may oscillate [12]. - **Strategy Outlook**: Oscillating operation [12]. Key Data Tracking PMI - In February 2026, the manufacturing PMI dropped to 49.0%. The decline was in line with seasonality, but there were also structural risks, such as a significant decline in external demand and an increasing risk of imported inflation [18]. CPI - In February 2026, the year - on - year CPI increased by 1.3%, and the month - on - month increase was 1.0%. The PPI year - on - year decline narrowed, and the month - on - month increase remained flat. After the Spring Festival, the CPI may face downward pressure, while the PPI may turn positive in March due to rising oil prices [20]. Import and Export - From January to February 2026, China's exports were $656.58 billion, imports were $442.96 billion, and the trade surplus was $213.62 billion. The high - growth of exports was mainly due to the upward cycle of global manufacturing and the "rush - to - export" effect [22]. Fixed - Asset Investment - From January to February, the year - on - year growth rate of fixed - asset investment rebounded to 1.8%. Manufacturing investment, infrastructure investment, and real estate development investment all improved. The growth rate of manufacturing investment rebounded to 3.1%, and infrastructure investment (including electricity) rebounded to 11.4% [25]. Social Retail - From January to February, the year - on - year growth rate of social retail sales rebounded to 2.8%, exceeding market expectations. Necessary consumption and catering revenue performed well during the Spring Festival, while durable - goods consumption showed differentiation [27]. Social Financing - In February 2026, the new social financing was 2.4 trillion yuan, and new RMB loans were 0.9 trillion yuan. The growth rate of social financing stock was 8.2% year - on - year, and M2 increased by 9.0% year - on - year. Social financing increased year - on - year, mainly supported by credit and non - standard financing. The social financing growth rate may face downward pressure but is expected to remain in an appropriate range [29].

Core Viewpoint - The sustainability of corporate medium and long-term loans remains to be observed, with improvements in February attributed to a more balanced credit issuance rhythm in January and a low base effect from early debt resolution last year [6][43]. Financial Data Summary - On March 13, the central bank released China's financial data for February 2026, showing a year-on-year decline in credit balance growth by 0.1 percentage points to 6.0%, while the stock of social financing remained flat at 8.2%, and M1 increased by 1.0 percentage points to 5.9% [5][10]. - In February, new credit totaled 900 billion yuan, a year-on-year decrease of 110 billion yuan, with household loans down by 261.6 billion yuan and non-bank loans down by 294.9 billion yuan. In contrast, corporate medium and long-term loans increased by 350 billion yuan [8][45]. - Social financing saw a year-on-year increase of 146.1 billion yuan in February, primarily driven by a 195.6 billion yuan increase in RMB loans, while government bonds decreased by 290.3 billion yuan due to a high base effect from the same period in 2025 [16][28]. - M1 improved, likely due to the impact of the Spring Festival on household demand deposits, with a notable increase in consumption during the holiday period further amplifying this effect. The growth in household demand deposits is expected to be a key driver for M1 improvement [18][44]. Monetary Policy Outlook - Future monetary policy is expected to be more flexible and efficient, with potential incremental policies to be introduced in response to economic conditions. The government work report emphasizes the flexible use of various policy tools, including reserve requirement ratio cuts and interest rate reductions, to maintain ample liquidity and optimize structural tools [7][24]. Regular Monitoring - In February, the structure of deposits showed that household deposits increased by 2.5 trillion yuan year-on-year, while corporate deposits decreased by 1.76 trillion yuan and fiscal deposits decreased by 1.6076 trillion yuan [34][45]. - The M2 growth rate remained stable at 9.0%, indicating a steady financial environment supported by increased fiscal spending and a significant drop in fiscal deposits [34][44].

Core Viewpoint - The report from China Galaxy Securities indicates that the social financing (社融) in February 2026 reached 9.6 trillion yuan, showing a year-on-year increase of 146.1 billion yuan, with a stock growth rate of 8.2%, remaining stable compared to the previous month. The credit structure continues to optimize, driven mainly by an increase in corporate loans, while household loans remain weak [1]. Group 1: Social Financing and Loan Growth - In February, social financing increased by 9.6 trillion yuan, with a year-on-year increase of 146.1 billion yuan; as of the end of February, the stock of social financing grew by 8.2% year-on-year, consistent with the previous month [1]. - The increase in corporate loans contributed significantly to the year-on-year growth of RMB loans, while government bonds showed a year-on-year decrease due to a high base effect from the previous year [2]. Group 2: Loan Structure and Performance - By the end of February, the balance of RMB loans from financial institutions increased by 6% year-on-year, with a monthly increase of 900 billion yuan, although household loans continued to drag down overall performance [3]. - Corporate loans increased by 1.49 trillion yuan, showing a year-on-year increase of 450 billion yuan, while household loans decreased by 650.7 billion yuan, primarily due to concentrated repayments after the holiday and weak demand [3]. Group 3: Money Supply and Deposit Trends - The M1 and M2 money supply grew by 5.9% and 9% year-on-year, respectively, with the M1-M2 gap narrowing to -3.1%, indicating an increase in the liquidity of funds [4]. - In February, financial institutions' RMB deposits increased by 1.17 trillion yuan, with household deposits rising by 3.11 trillion yuan, while corporate deposits decreased by 2.65 trillion yuan, attributed to the transfer of funds from enterprises to households [4].

Group 1: Social Financing and Credit Growth - In February 2026, the social financing scale increased by approximately 2.38 trillion yuan, exceeding market expectations of 1.8 trillion yuan, with a year-on-year increase of 146.1 billion yuan[3] - The year-on-year growth rate of social financing stock remained stable at 8.2%, consistent with the previous month[3] - The increase in social financing was primarily driven by real entity credit and undiscounted bank acceptance bills, while government bond financing saw a year-on-year decline[3] Group 2: Corporate and Household Credit Dynamics - New corporate short-term loans amounted to 600 billion yuan, a year-on-year increase of 270 billion yuan, supported by seasonal demand for operational funds due to pre-holiday wage distributions[4] - New corporate medium- to long-term loans reached 890 billion yuan, a year-on-year increase of 350 billion yuan, driven by policy financial tools and accelerated project funding[4] - Household short-term loans decreased by 469.3 billion yuan, a year-on-year reduction of 195.2 billion yuan, primarily due to the timing of the Spring Festival affecting demand[5] - Household medium- to long-term loans fell by 181.5 billion yuan, a year-on-year decrease of 66.5 billion yuan, indicating ongoing weakness in household credit largely due to insufficient real estate demand[5] Group 3: Monetary Supply and Economic Outlook - M1 growth rate improved to 5.9%, up 1 percentage point from the previous month, supported by increased corporate financing demand and a favorable exchange rate[6] - M2 growth rate remained stable at 9.0%, with ample liquidity in the banking system and increased fiscal spending providing support[6] - The corporate sector is expected to continue playing a stabilizing role in credit expansion, with improved PPI and industrial prices likely to enhance corporate profitability and capital expenditure[7] - Risks include potential macroeconomic underperformance, weaker-than-expected real estate sales, and geopolitical uncertainties[7]

Report Industry Investment Rating - Not provided in the given content Core Viewpoints of the Report - In February 2026, the year-on-year growth rate of the stock of social financing was +8.2%, with the growth rate remaining basically flat month-on-month. The year-on-year growth rates of M1 and M2 were 5.9% and 9.0% respectively, with the growth rate of M1 increasing by 1.0 percentage point month-on-month and that of M2 remaining basically flat. The new credit in February was about 0.90 trillion yuan, a year-on-year decrease of 0.11 trillion yuan. The credit structure was optimized overall, with corporate medium- and long-term loans performing well, while household credit remained weak and bill financing impulse weakened. Affected by the Spring Festival holiday, the net issuance scale of government bonds in February was low, with the increment of government bonds about 1.40 trillion yuan, a year-on-year decrease of about 0.29 trillion yuan. In terms of deposits, household deposits increased year-on-year, indicating that the current risk preference of households has not been systematically improved and the savings willingness is still strong. The pressure of "deposit outflow" from banks may be weaker than market concerns [3][7]. Summary by Relevant Catalogs Credit - The credit increment decreased year-on-year, but the credit structure was optimized overall. In February 2026, the new credit was about 0.90 trillion yuan, a year-on-year decrease of 0.11 trillion yuan. Corporate medium- and long-term loans increased year-on-year, with the corporate loan increment in February about 1.49 trillion yuan, a year-on-year increase of 0.45 trillion yuan. Among them, short-term loans and medium- and long-term loans increased by 0.27 trillion yuan and 0.35 trillion yuan respectively year-on-year. The increase in medium- and long-term loans reflects the good quality of corporate credit. The increment of bill financing in February was -350 million yuan, a year-on-year decrease of about 0.2 trillion yuan, indicating that banks' "impulse" demand has weakened and they pay more attention to the optimization of the credit income structure. However, household credit remained weak, with household loans decreasing by about 0.65 trillion yuan in February, a year-on-year decrease of 0.26 trillion yuan. Among them, short-term loans and medium- and long-term loans decreased by 0.20 trillion yuan and 0.07 trillion yuan respectively year-on-year. Looking forward, the "inflection point" of the year-on-year increase in credit increment this year may mainly depend on the driving effect of consumption subsidy policies on household credit and the specific implementation schedule of the 800 billion yuan new policy-based financial instruments, which may not significantly drive the annual credit increment, but will have a certain impact on the credit growth rhythm [10]. Social Financing - Affected by the Spring Festival holiday in February, the increment of government bonds decreased year-on-year. In February 2026, the increment of social financing was about 2.38 trillion yuan, a year-on-year increase of about 0.15 trillion yuan. In terms of sub-items other than credit, the new off-balance-sheet financing in February decreased less year-on-year by 0.19 trillion yuan, and the new direct financing increased year-on-year by about 1.97 billion yuan. In addition, affected by the Spring Festival holiday, the net issuance scale of government bonds in February was low, with the increment of government bonds about 1.40 trillion yuan, a year-on-year decrease of about 0.29 trillion yuan [10]. Money - The year-on-year growth rate of M1 rebounded, and the growth rate gap between M2 and M1 continued to narrow. In February 2026, the year-on-year growth rate of M1 continued to rebound. On the one hand, the entire Spring Festival holiday was in February this year, and the holiday was relatively long, which expanded the consumption scenarios and willingness of households during the holiday. On the other hand, the RMB was still in an appreciation channel in February as a whole, and the increase in enterprises' willingness to settle foreign exchange promoted the increase in RMB deposits. Analyzing the specific deposit data in February: 1) Household deposits increased by 3.11 trillion yuan, a year-on-year increase of 2.50 trillion yuan; enterprise deposits decreased by 2.65 trillion yuan, a year-on-year decrease of 1.76 trillion yuan. Part of this was affected by the payment of salaries by enterprises before the Spring Festival, which led to the transfer of enterprise deposits to household deposits. At the same time, the relatively fast return of household deposits after the Spring Festival also reflects that the current risk preference of households has not been systematically improved and the savings willingness is still strong. The pressure of "deposit outflow" from banks may be weaker than market concerns. 2) Fiscal deposits decreased by 0.35 trillion yuan, a year-on-year decrease of 1.61 trillion yuan. The fiscal expenditure intensity in February was significantly higher, which also provided certain support for the liquidity of the bond market. 3) Non-bank deposits increased by 1.39 trillion yuan, a year-on-year increase of 1.44 trillion yuan less. The adjustment of the equity market in February this year had a certain impact on the growth of non-bank deposits [10]. Outlook for Financial Data and the Bond Market - Overall, in the financial data of February, corporate credit showed a certain degree of prosperity, but household credit remained weak. The issuance of government bonds at the beginning of the year has not increased yet, and at the same time, deposit growth is good. Overall, it is relatively friendly to the bond market. Recently, the market is concerned that the self-discipline requirements for interbank deposits may be further tightened, and the bank's liability cost may decline accordingly, which is also beneficial to the bond market. However, looking forward from mid-March, it is still necessary to note that, first, the rhythm of credit issuance this year may be significantly affected by policies, that is, pay attention to when consumption subsidies and new policy-based financial instruments will be implemented to drive credit; second, if the issuance of government bonds accelerates in the second quarter, it may bring certain supply pressure to the bond market; third, how the recent corporate foreign exchange settlement behavior responds to the phased pressure on the RMB exchange rate, which will affect the subsequent performance of the M1 growth rate [10].

Loan and Financing Data - In February 2026, new RMB loans amounted to 900 billion, a year-on-year decrease of 110 billion[1] - New social financing in February was 2.38 trillion, an increase of 146.9 billion year-on-year[7] - Corporate loans increased significantly by 450 billion, driven by investment policies and high export growth[5] Monetary Supply and Growth Rates - As of the end of February, M2 growth rate was 9.0%, remaining at a high level compared to the past two years[8] - M1 growth rate rose to 5.9%, an increase of 1.0 percentage points from the previous month[9] - The increase in M2 was supported by a significant rise in fiscal spending, with fiscal deposits decreasing by approximately 1.6 trillion[8] Economic Policy and Outlook - The government work report emphasizes the continuation of a moderately loose monetary policy, with expected interest rate cuts of 0.2 to 0.3 percentage points throughout the year[2] - The central bank is expected to implement a reserve requirement ratio cut of 0.5 percentage points, alongside other liquidity injection measures[11] - Overall, inflation is projected to remain low in 2026, allowing for sufficient adjustment space in monetary policy[12]

Core Viewpoint - The overall performance of social financing and corporate loans in February is relatively stable, while the household sector remains weak. However, due to the preemptive fiscal spending and strong corporate foreign exchange settlement, M1 and M2 have risen against the trend, indicating that macro liquidity remains ample [1][2]. Summary by Sections Social Financing and Corporate Loans - The total social financing growth rate remains flat at 8.2%. In February, government bond financing decreased year-on-year due to the Spring Festival impact. Cumulatively, from January to February, the net financing of government bonds decreased by 7.2 billion yuan, maintaining a similar issuance pace as last year [2]. - Although corporate credit appears to have increased seasonally in February, it is essential to consider the low base effect from last year's concentrated repayment of local debts. Corporate financing showed signs of recovery during the post-holiday period, but it is not strong compared to historical data [2]. Household Sector and Deposits - The household credit sector continues to show weakness, influenced by the seasonal effects of the Spring Festival and a trend of active deleveraging. The progress of fiscal spending and strong corporate foreign exchange settlement supports ample liquidity [2]. - In the first quarter of 2026, a peak in the maturity of household time deposits is expected. The combined data for January and February indicates a slight increase in household deposits, while non-bank deposits have significantly increased, suggesting a trend of "deposit migration" is accelerating. The direction of the funds that will be released upon maturity this year will determine the structural liquidity support in the market going forward [2].

Investment Rating - The report maintains a "Buy" rating for several banks, including Agricultural Bank, Chengdu Bank, Chongqing Rural Commercial Bank, Nanjing Bank, Industrial and Commercial Bank of China, Bank of China, Shanghai Bank, Ningbo Bank, and China Construction Bank, while recommending "Hold" for Chongqing Rural Commercial Bank [11][28][32]. Core Insights - The report highlights that the increase in social financing (社融) in February reached 2.38 trillion yuan, exceeding expectations, primarily driven by corporate credit growth and marginal recovery in off-balance-sheet financing [1][5]. - Corporate loans saw a significant increase of 1.49 trillion yuan in February, with year-on-year growth of 450 billion yuan, while household loans decreased by 650.7 billion yuan, influenced by the timing of the Spring Festival [2][5]. - Government bond issuance decreased by 2.9 trillion yuan year-on-year in February, reflecting a slowdown in issuance pace due to the large-scale front-loading in January [3][5]. - The M1 and M2 money supply growth rates were 5.9% and 9.0% respectively, with M1 showing continued improvement due to the activation of corporate funds post-Spring Festival [4][5]. Summary by Sections Social Financing and Credit - February's social financing increment was 2.38 trillion yuan, with a year-on-year increase of 146.9 billion yuan, maintaining a growth rate of 8.2% [1][5]. - Corporate loans contributed significantly to this growth, with short-term and medium-to-long-term loans increasing by 2.7 trillion yuan and 3.5 trillion yuan respectively [2][5]. Government Bonds and Off-Balance-Sheet Financing - Direct financing in February was 1.6 trillion yuan, down 270.6 billion yuan year-on-year, with government bond financing at 1.4 trillion yuan, also down 290.3 billion yuan [3][5]. - Off-balance-sheet financing showed a marginal improvement, with trust loans increasing by 309 billion yuan year-on-year, while entrusted loans decreased slightly [3][5]. Money Supply and Deposits - M1 and M2 growth rates were reported at 5.9% and 9.0%, respectively, with M1 showing a recovery trend due to increased corporate liquidity [4][5]. - New deposits totaled 1.17 trillion yuan in February, with household deposits increasing significantly while non-financial corporate deposits decreased [4][5].

Financing Demand - In February, new social financing (社融) reached 2.38 trillion yuan, an increase of 146.1 billion yuan year-on-year, exceeding the consensus expectation of 1.84 trillion yuan[3] - New RMB loans amounted to 848.4 billion yuan, up 195.6 billion yuan from the previous year, but down 4.05 trillion yuan from January[3] - The government bond financing was weak, with a net increase of only 1.4 trillion yuan in February[3] Monetary Supply - M2 growth was 9.0% year-on-year, consistent with January's growth rate, while M1 increased by 5.9%, up 1.0 percentage points from January[3] - M0 saw a significant increase of 14.1% year-on-year, rising by 11.4 percentage points from January[3] - The central bank injected 779.5 billion yuan into the market in February[3] Deposit Trends - February saw a total of 1.17 trillion yuan in new deposits, down 3.25 trillion yuan year-on-year[3] - The increase in deposits was primarily driven by a rise in household deposits, which increased by 2.5 trillion yuan year-on-year[3] - Corporate deposits decreased by 2.65 trillion yuan compared to the previous year[3] Loan Dynamics - Financial institutions issued 900 billion yuan in new loans in February, with corporate loans accounting for 1.49 trillion yuan, indicating strong demand[3] - However, household loans were weak, with a decrease of 650.7 billion yuan in new household loans compared to the previous year[3] - The government aims to maintain a moderately loose monetary policy to support economic growth and stabilize prices[3]

Investment Rating - The industry investment rating is "Overweight" (maintained) [1] Core Insights - The report highlights that the social financing (社融) growth rate remains stable, with a notable increase in corporate credit expansion during the recovery phase [7][11] - In February 2026, the new social financing amounted to 2.38 trillion yuan, an increase of 146.9 billion yuan compared to the same period last year, exceeding market expectations [11][12] - The report emphasizes the importance of monitoring the sustainability of corporate credit expansion and the role of financial tools during the March-April recovery phase [13] Summary by Sections Social Financing Situation - In February 2026, social financing increased by 2.38 trillion yuan, with a year-on-year growth of 8.2%, maintaining the same growth rate as the previous month [11][12] - The main contributors to this increase were RMB loans and improvements in non-discounted bank acceptance bills, while government bonds saw a significant decrease due to the Spring Festival impact [12][13] Credit Situation - RMB loans increased by 900 billion yuan in February, which is 110 billion yuan less than the same month last year, but still above market expectations [15] - The credit balance grew by 6.0% year-on-year, with a slight decrease in growth rate compared to the previous month [15] - Corporate loans saw a year-on-year increase of 450 billion yuan, while residential loans decreased by 261.6 billion yuan [17] Liquidity and Deposit Situation - In February, M1 and M2 growth rates were 5.9% and 9.0% respectively, with the M2-M1 gap narrowing to 3.1% [21][23] - Total deposits increased by 1.17 trillion yuan, but this was a decrease of 3.25 trillion yuan compared to the same period last year, indicating a slow evolution of deposit migration [23][24] Investment Recommendations - The report suggests a shift in the investment logic for bank stocks from "pro-cyclical" to "weak-cyclical," indicating that during stable economic periods, high dividend yields from bank stocks will remain attractive [27] - Two main investment lines are recommended: regional banks with strong certainty and large banks with stable high dividends [27]