Unexpectedly weaker September TSF in China reaches RMB 1.05tn

Due to weaker non-bank activity.

The People’s Bank of China (PBOC) has reported that total social financing (TSF) in September amounted to RMB 1.05tn, compared to Bloomberg consensus of RMB 1.15tn.

According to a research note from Barclays, from this amount, new RMB loans totaled RMB 857bn, which went beyond Bloomberg consensus of RMB 750bn.

The lower-than-expected TSF was mainly attributed to weaker non-bank activity. While the decent loan growth was mainly driven by faster growth in short-term (ST) loans (ST corporate +RMB 165bn vs. -RMB 69bn in Aug and ST retail +RMB 129bn vs. +RMB 84bn in Aug).

Here's more from Barclays:

In the meantime, mid- to long-term loans hold up well in the month.

On the deposit side, total new RMB deposits amounted to RMB 924bn in September (weaker than RMB 1.6tn in both Sep-13 and Sep-12), mainly driven by retail deposits (+RMB 941bn) on previously arranged quarter-end maturing WMP.

We believe the impact of Doc. 236 has not been fully reflected in the September loan and deposit numbers due to the short implementation period (the regulations were announced on September 12).

Nonetheless, we expect banks to make more adjustments on their deposit-taking strategies to gradually comply with the new rule, which could lead to gradual weakening of growth in deposits and loans for the next few months, in our view.

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