The country's deleveraging campaign boosted return of funding demand to on-balance sheets.
Despite seasonal effects, demand for medium term loans in China’s banks remained robust and even grew above expectations as total loan to households and businesses rose to $155.06b (CNY980.5) in February, according to OCBC Treasury Research.
“The strong demand for medium-term lending was partially attributable to the return of funding demand from off-balance sheet to on-balance sheet as part of China’s de-leverage campaign,” OCBC said, as off-balance sheet entrusted loan dipped for the second consecutive month to $11.86b (CNY75b).
Banker’s acceptance also plunged from $22.72b (CNY143.7b) to $1.58b (CNY10b) in January.
As funding demand continues to make its way back to the on-balance sheet, analysts remain bullish that loan growth will remain strong in the upcoming months which justifies the China Banking Regulatory Commission's move to relax loan provision coverage ratio to 120% to ease pressure off of banks.
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