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<Research>CICC: CN Credit Season Dull in Apr; CN Banks' Fundamentals Still Resilient Despite Emerging Tariff Impact
According to a CICC report, the People's Bank of China (PBOC) has released financial data for April, showing that social financing was in line with, while credit was shy of, th...
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<Research>CICC: CN Credit Season Dull in Apr; CN Banks' Fundamentals Still Resilient Despite Emerging Tariff Impact
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According to a CICC report, the People's Bank of China (PBOC) has released financial data for April, showing that social financing was in line with, while credit was shy of, the broker's expectations.

In April, new social financing in China reached RMB1.16 trillion, up RMB1.22 trillion YoY, with the outstanding balance growing by 8.7% YoY, an acceleration of 0.3 ppts from the previous month. Meanwhile, new loans totaled RMB280 billion, down RMB450 billion YoY, with the outstanding balance climbing by 7.2% YoY, a deceleration of 0.2 ppts from last month. M1/ M2 growth rates touched 1.5%/ 8%, marking a decrease of 0.1 ppt/ an increase of 1 ppt MoM.

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As indicated by the report, April is traditionally a low season for credit in China, but new loans for this April were the lowest for the same period since 2006, reflecting some front-loading of credit in 1Q, as well as the effects of debt swaps and tariffs. The YoY rise in social financing continued to be mainly driven by proactive fiscal policy.

In addition, the impact of tariffs has begun to emerge, with public loans in China dropping by RMB250 billion YoY in April, including a YoY decrease of RMB70 billion in short-term corporate loans and RMB160 billion in medium- and long-term corporate loans. Bill financing growth was roughly flat compared to the same period last year, indicating that the impact of tariffs on corporate expectations is starting to show.

For Chinese bank stocks, while there is some pressure on asset quality in areas such as retail loans, overall bank fundamentals remain relatively robust, said the report. Stable profit growth and dividend payout ratios give them the characteristics of high dividend yields.

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In the short term, CICC estimated that factors such as capital allocation games and the ex-dividend effect may cause some volatility in share prices. In the medium term, investors may consider allocating to state-owned major banks and CM BANK (03968.HK)  +0.100 (+0.204%)    Short selling $104.36M; Ratio 33.712%   , which offer higher dividends and stable payouts.
(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2025-05-16 12:25.)

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