In the first eleven months, RMB loans increased by 17.1 trillion yuan, especially household loan growth has recently been rising, mainly due to the stabilization and recovery of personal housing loans; in the month, new medium and long-term loans for households increased by nearly 300 billion yuan, showing a significant month-on-month increase.

Data shows that by the end of November, the broad money supply (M2) increased by 7.1% year-on-year, slightly decreased by 0.4 percentage points from the previous month; RMB loans increased by 7.7% year-on-year, slightly decreased by 0.3 percentage points from the previous month. The slight month-on-month decline in loan growth in the month was mainly affected by some short-term factors. Authoritative experts indicated that the financial data in November was significantly impacted by the increased local debt restructuring efforts and accelerated disposal of non-performing assets, which has a continuous effect on the total financial data, but the financial support for the real economy has not weakened.

From the price perspective, the financing cost of the real economy continues to decline. Preliminary statistics from the central bank indicate that in November, the weighted average interest rate for new corporate loans (in both domestic and foreign currency) was 3.45%, 2 basis points lower than the previous month and 36 basis points lower than the same period last year; the interest rate for new personal housing loans (in both domestic and foreign currencies) was 3.08%, 7 basis points lower than the previous month and 92 basis points lower than the same period last year, both at historical low levels.

The acceleration of local governments' debt restructuring impacts the credit stock.

From January to November of this year, various RMB loans increased by 17.1 trillion yuan. Recently, the increased intensity and speed of local government debt restructuring will have a certain impact on the credit stock and subsequently affect the monthly new credit scale.

Recently, the central government introduced a combination of debt restructuring measures, adding 6 trillion yuan of special bond quotas for local government refinancing, and starting from 2024, will arrange 800 billion yuan each year from new local government special bonds for five consecutive years to replace implicit debt. Currently, the total amount of special bonds for local government refinancing issued nationwide has nearly reached the planned issuance amount for the whole year.

According to market institution surveys, after financing platforms and other entities obtain special bond funds, most will repay their debts in about 10 to 20 days, with the vast majority being loans, to avoid paying interest on both bonds and loans. It is estimated that in November, about 250 billion yuan of local debt restructuring was completed nationwide, and there will be a larger scale of debt restructuring in December.

Industry experts indicate that for local governments, the alleviation of debt pressure is more conducive to "lightening the load" to develop the real economy. This is beneficial for relieving the debt chain, smoothening economic circulation, and preventing and mitigating risks, possessing multiple bullish signals. For banks, the reduction in loans translates into an increase in government bonds, with a neutral overall impact on bank assets. Although debt replacement may reduce banks' interest income, the risk weight of local special bonds (20%) is lower than that of loans (75%–100%). Debt replacement will reduce banks' credit risk and capital consumption.

The reduction of non-performing assets accelerates.

The accelerated reduction of non-performing assets will also affect the stock of credit, subsequently impacting this month's new credit volume readings. The aforementioned experts revealed that as the reform of financial institutions progresses in an orderly manner, commercial banks are pressing the "accelerate" button on non-performing asset disposal. Data disclosed by the loan registration and circulation center of the banking industry shows that since the third quarter, the number of non-performing loans listed for transfer and the amount of unpaid principal and interest have significantly increased compared to the same period last year.

"The reduction of loans will lead to a decrease in the balance of various loans for the month, thereby impacting the year-on-year growth rate of financial aggregate data for the next 12 months," the aforementioned experts stated.

According to market institutions' estimates, the scale of non-performing asset disposal by national financial institutions in November approached 500 billion yuan.

Market experts generally believe that in the long run, the disposal of non-performing loans helps financial institutions mitigate existing risk hazards, laying a good foundation for subsequent steady operation. It will also promote regional financial stability, improve local financial ecology, and enhance the quality and efficiency of financial services for the real economy. The write-off of non-performing loans is merely an accounting treatment by banks, and the lending relationship between banks and enterprises has not changed, not directly affecting the operational activities of the real economy.

The growth rate of housing loans is rebounding, and early repayments have significantly decreased.

In November, the scale of new household loans and new corporate loans increased compared to the previous month, primarily reflected in the stabilization of medium to long-term loans for households and enterprises.

The changes in long-term loans to households are closely related to residents' willingness to buy houses. In November, long-term household loans significantly improved compared to October, mainly due to stabilization and recovery in personal housing loans, which corroborated the marginal improvement in the real estate market transactions for that month, reflecting further recovery in the real estate market and residents' confidence. In November, the year-on-year growth rate of the transaction area of commercial housing in 30 large and medium-sized cities turned positive, and transactions have remained relatively active since December.

According to reports from the central bank, with the implementation of a package of incremental policies aimed at stabilizing the real estate market gradually taking effect, the phenomenon of early repayments of personal housing loans has significantly decreased, and the growth rate of housing loans has recently rebounded. In October this year, the issuance of personal housing loans exceeded 400 billion yuan, with early repayment amounts decreasing, and the proportion of early repayments to the total balance of personal housing loans is significantly lower than before the introduction of the package of incremental policies.

In addition, authoritative experts expect that effective credit demand will gradually be released in the future. With the intensive introduction and effective implementation of the package of incremental policies, social expectations and market confidence are gradually recovering. The meetings of the Central Political Bureau and the Central Economic Work Conference have further released Bullish Signals, and favorable factors for economic recovery are continuously accumulating. The effective financing demands in the market will further improve, financial resources will flow more toward major Global Strategies, key areas, and weak links, and financial support for the high-quality development of the real economy will become stronger and more effective.

Editor/lambor