Some analysts see new lending rise to as high as 1.8 trillion yuan in March and M2 growth bouncing back to at least 9.1%, on the back of a seasonal rebound as well as the ongoing return of assets onto balance sheets amidst China’s shadow banking crackdown.
“There is considerable pressure for off-balance sheet financing to return back to balance sheets in March, and this could push new lending to 1.5 trillion yuan,” said Lu Zhengwei (鲁政委), chief economist of Industrial Bank Co. to China Securities Journal.
Lian Ping (连平), chief economist of Bank of Communications, said that new lending will rebound in March compared to February, due to the impact of the Chinese New Year vacation.
Lian also points out, however, that domestic Chinese bond issuance has revived since the start of the year, with issuance of approximately 4.85 trillion yuan in January and February, and over 3.75 trillion yuan issued in March.
Banking sector financial institutions are increasingly inclined to take part in bond placements, which will have a considerable impact on loan extension.
Lian also points to a rise in demand for on-balance sheet financing as a result of China’s shadow banking crackdown and deleveraging campaign.
He expects loan growth to remain steady in March, with a lending increase of approximately 1.25 trillion yuan.
Other analysts are far more optimistic, with a report from Guohai Securities forecasting new RMB loans to reach 1.8 trillion yuan in March.