Review of financial performance in Q1 2004

Money supply expanded relatively fast, ensuring a favorable monetary situation

At end-March, broad money (M2) reached RMB23.2 trillion yuan, increasing by 19.1 percent YOY, 0.5 percentage points lower than the growth in 2003. Narrow money (M1) reached RMB8.6 trillion yuan, increasing by 20.1 percent, which was 1.4 percentage points higher compared with last year. Cash in circulation (M0) reached RMB1.9 trillion yuan, increasing year-on-year by 12.8 percent. In the first quarter, net cash withdrawal accumulated to RMB44.9 billion yuan, RMB22.7 billion yuan more than the same period of 2003. M2 and M1 both far outgrew the sum of GDP and CPI growth. In general, monetary situation remained favorable.

Bank loans increased rapidly with loan structure further optimized

Outstanding loans denominated in both local and foreign currencies in all financial institutions increased by 20.7 percent to RMB17.9 trillion yuan. Cumulative increase of loans in the first quarter climbed by RMB59.6 billion yuan to RMB913.1 billion yuan. Outstanding RMB loans reached RMB16.7 trillion yuan, increasing by 20.1 percent, which was 1 percentage point lower than the growth recorded for 2003. Cumulative increase of loans in March grew by RMB24.7 billion yuan year-on-year to RMB835.1 billion yuan. In terms of loan structure, the increased short-term loans grew by RMB42.3 billion yuan to RMB397.5 billion yuan. In particular, increase of loans to industrial sectors totaled RMB66.5 billion yuan, increase of loans to agricultural sector and township and village enterprises grew by RMB35.2 billion yuan and RMB6.3 billion yuan respectively, to RMB120.3 billion yuan and RMB38.5 billion yuan. Medium-term working capital loans increased by RMB14 billion yuan, RMB20.7 billion yuan lower than the growth recorded a year earlier. Medium and long-term loans accelerated by RMB69.9 billion yuan year-on-year to RMB358.7 billion yuan. In particular, increase of capital construction loans rose by RMB33.7 billion yuan to RMB170 billion yuan, medium and long-term consumer credit by RMB7.7 billion yuan to RMB104.3 billion yuan, paper financing down by RMB79.2 billion yuan to RMB50.9 billion yuan. Outstanding foreign currency loans increased year-on-year by 29.9 percent to USD140.2 billion, accelerating by USD4.2 billion to USD9.4 billion in the first quarter. In particular, short-term foreign exchange loans grew by 51.5 percent to USD50.5 billion, with cumulative increase in the first quarter accelerating by USD2.2 billion to USD4.6 billion; medium and long-term foreign exchange loans expanded by 27 percent to USD48.8 billion, with cumulative increase accelerating by USD1.1 billion to USD2.1 billion. In terms of loan structure, loans extended to support agriculture, capital construction, and consumer credit increased relatively fast, representing a further optimized loan structure.

Deposits increased gradually, indicating adequate liquidity of the enterprises

Outstanding deposits denominated in both local and foreign currencies in all financial institutions reached RMB23.3 trillion yuan at end-March, increasing by 19.6 percent from a year earlier, with cumulative increase during the first quarter of 2004 rising by RMB108.7 billion yuan year-on-year to RMB1.2 trillion yuan. RMB deposits reached RMB22.1 trillion yuan, increasing by 21 percent, which was 0.1 percentage points lower compared with last year, with cumulative increase of the first three- month growing by RMB112.8 billion yuan to RMB1.3 trillion yuan. In particular, corporate deposits stood at RMB7.5 trillion yuan, increasing by 21.7 percent, 2.3 percentage points higher than the growth recorded for 2003, with cumulative increase of the first three-month growing by RMB28.4 billion yuan to RMB200.3 billion yuan. The rapid growth of corporate deposits indicated adequate liquidity of the enterprises. Outstanding household savings deposits reached RMB11.2 trillion yuan, increasing by 18.3 percent, 0.9 percentage points lower than 2003, with cumulative increase in the first three-month growing by RMB66.4 billion yuan to RMB824.6 billion yuan. In particular, cumulative increase of time deposits soared by RMB0.5 billion yuan to RMB507.3 billion yuan; cumulative increase of demand deposits grew by RMB65.9 billion yuan to RMB317.4 billion yuan. Outstanding foreign currency deposits of financial institutions decreased by 1.4 percent to USD146.8 billion, while deposits of enterprises and public institutions increased by 5.9 percent to USD52 billion and household deposits went down by 8.3 percent to USD82.6 billion.

Foreign exchange reserves increased and RMB exchange rate remained stable

At the end of March, official foreign exchange reserves reached USD439.8 billion, up 39.2 percent. Cumulative increase of the first quarter grew by USD6.9 billion year-on-year to USD36.5 billion. RMB exchange rate remained stable, being at 8.2771 yuan per US dollar.