Sound and stable financial performance in the first ten months of 2003

 

 

Financial performance

Money supply increased rapidly. At the end of October, the M2 balance went up by 21 per cent year-on-year to 21.45 trillion yuan, recovering 0.3 percentage points from the previous month. The M1 balance stood at 8.03 trillion yuan, up 19.6 per cent year-on-year. M0 recorded a balance of 1.83 trillion yuan, a rise of 14 per cent from the previous year. In the first ten months this year, 97.3 billion yuan worth of cash was put into circulation, 64.7 billion yuan more than that in the same period of last year.

Deposits in financial institutions continued to rise rapidly. Deposits of enterprises underwent a dramatic change in structure. At the end of October, deposits in all financial institutions (including foreign-funded institutions) denominated in both domestic and foreign currencies went up by 21.2 per cent year-on-year to 21.65 trillion yuan, in which 20.41 trillion yuan were RMB deposits. The cumulative increase of deposits in all financial institutions in the first ten months was computed at RMB 3.317 trillion yuan, 921.8 billion yuan more than that of the same period last year, in which 137.6 billion yuan were increased in October.

Corporate deposits rose considerably, and changed markedly in structure. At the end of October, the balance of corporate deposits denominated in both domestic and foreign currencies was 7.45 trillion yuan, up 22.5 per cent year-on-year. From January to October, the growth of corporate deposits stood at 1.029 trillion yuan. In October, corporate deposits increased by 27.5 billion yuan, up 37.4 billion yuan year-on-year.

Household savings increased rapidly. At end-October, household savings deposits in all financial institutions (including foreign-funded ones) denominated in both domestic and foreign currencies reached RMB10.86 trillion yuan, up 18 per cent year-on-year. In the first ten months of 2003, the accumulative growth of household savings was 1.419 trillion yuan, 256.8 billion yuan more than that in the same period of last year. The monthly growth of postal savings in October was 3.1 billion yuan, 6.3 billion yuan less year-on-year.

In October, the increase of RMB loans went down by 10.6 billion yuan for the first time this year. At end-October, outstanding loans by all financial institutions (including foreign-funded ones) in both domestic and foreign currencies reached RMB16.73 trillion yuan, up 23.6 per cent year-on-year. Included were 15.67 trillion yuan RMB loans and US$ 128.2 billion forex loans.

In the first ten months this year, loans by all financial institutions (including foreign-funded ones) in both domestic and foreign currencies stepped up by 2.7451 trillion yuan, up 1.2682 trillion yuan year-on-year. Among them, the rises of RMB and forex loans were 2.5322 trillion yuan and US$ 25.6 billion respectively.

In October, the newly added RMB loans were for the first time this year less than that in the same period of last year, 10.6 billion yuan less.  In the same month, financial institutions' paper financing saw a shrink of 50.4 billion yuan, decreasing by 53.1 billion yuan year-on-year.

Trading in the interbank market was active. In the first ten months this year, the total turnover hit 14.20 trillion yuan, soaring up 46.8 per cent year-on-year. Since May, the weighted average monthly rates of interbank funding and bond repo have been recovering, reaching 2.86 per cent and 3.11 per cent respectively in October.

Analysis of impact of monetary policy on loan increase

Since July, monetary policies adopted by the central bank have begun to take effect.

The increase of credit loans slowed down, especially loans from state-owned commercial banks. From July to October this year, the average monthly increase of RMB loans by all financial institutions (including foreign-funded institutions) was 108.8 billion yuan less than that of the first half year. The loan increase in October witnessed the first year-on-year decline this year.

Since July, most commercial banks have raised the ratio of deposits with their headquarters. Meanwhile, banks have tightened the examining and approving procedures for credit loans, streamlined loan-approval limitations placed on subsidiaries, and have strengthened management and supervision on subsidiary credit granting.

    

Opinions and suggestions

In the first ten months, money supply rose rapidly and loans increased considerably. Currently, monetary policies have begun to show their effect, but it takes time for these policies to come into full play. In the future, the People’s Bank of China should maintain this economic and financial development momentum and continue to implement a steady monetary policy.