REVIEW OF FINANCIAL PERFORMANCE IN NOVEMBER 2004

The rise in broad money supply (M2) continued. At the end of November, the balance of broad money (M2) stood at 24.71 trillion yuan, increasing year-on-year by 14 percent and up 0.6 percentage points month-on-month. Narrow money (M1) had a balance of 9.24 trillion yuan, increasing by 13.8 percent, 1.2 percentage points higher from a month earlier. The annualized month-on-month rise of M2 was 17.7 percent, and that of M1 stood at 24.3 percent. seasonally Adjusted, the month-on-month growth of money supply this month rebounded markedly.Cash in circulation (M0) was 2.02 trillion yuan at the end of November. 13.1 billion yuan was put into circulation this month, 5.8 billion yuan less than that of the same period of 2003.

At the end of November, base money registered a balance of 5.4 trillion yuan, up 12 percent year-on-year, a rise 1.6 percentage points higher than that of last month. M2 multiplier was 4.58, down 0.05 from the previous month, similar to that of the same period of last year. The excess reserve ratio of all financial institutions was 3.97 percent, 0.4 percentage points higher than the previous month.

Credit growth rebounded, and by the end of November, outstanding loans denominated in both domestic and foreign currencies in all financial institutions reached 18.64 trillion yuan, a year-on-year increase of 13.5 percent, a rise of 0.2 percent month-on-month. RMB loans increased by 13.5 percent year-on-year to 17.52 trillion yuan, up 0.2 percentage points from the end of October. Loan growth rebounded steadily.

The increase in loans in November was 149.5 billion yuan, 50.9 billion more year-on-year. New RMB loans in the first eleven months of 2004 totaled 1.9691 trillion yuan, 651.9 billion yuan less year-on-year.

In terms of loan structure, the growth numbers in paper financing and medium and long-term loans this month exceeded those for the same period of last year by 48 billion and 10.3 billion yuan respectively, while the increase in short-term loans shrank year-on-year. At the end of November, the balance of medium and long-term loans stood at 6.83 trillion yuan, up 25.2 per cent year-on-year. The rise of medium and long-term loans was 17.8 percentage points higher than that of short-term loans and paper financing.

The balance of foreign currency loans rose by 12.7 percent year-on-year to US$135.5 billion, down 0.5 percentage points month-on-month. The accumulated increase of foreign currency loans in the first eleven months of 2004 amounts to US$16.7 billion, US$11.4 billion less year-on-year.

The growth of deposits in financial institutions accelerated, and corporate deposits and household savings deposits experienced a remarkable year-on-year increase. Outstanding deposits denominated in both domestic and foreign currencies in all financial institutions reached 25.26 trillion yuan at the end of November, representing a year-on-year increase of 15.6 percent, up 0.3 percentage points from October. Of that, household savings deposits denominated in both local and foreign currencies stood at 12.43 trillion yuan, up 13.7 percent year-on-year, a rise 0.5 percentage points higher than the previous month. Corporate deposits in both RMB and foreign currencies had a balance of 8.63 trillion yuan, up 15.2 percent, a rise of 0.9 percentage points from the previous month.

At the end of November, there were 23.98 trillion yuan worth of outstanding RMB loans, up 16.3 percent year-on-year. Among that, RMB savings deposits had a balance of 11.76 trillion yuan, up 15.1 percent year-on-year, a rise 0.6 percentage points higher than the previous month. The annualized month-on-month increase was 22 percent, showing a remarkable upward trend.

The increase in deposits in November was 330.6 billion yuan, up 126.3 billion yuan year-on-year. Affected by the interest rate hike, the increase in household savings deposits was 161.7 billion yuan this month, up 76.3 billion yuan year-on-year. This indicates that the stability of RMB savings deposits was enhanced remarkably. Newly added corporate deposits this month went up by 87.8 billion yuan year-on-year to 121.1 billion yuan, due to satisfactory corporate yields and increasing derivative deposits because of expanding new loans.

Interbank market turnover moved up and market interest rates continued to drop slightly. In November, the national interbank RMB market traded 1.1102 trillion yuan, bettering the October figure by 232.5 billion yuan. The average daily turnover in November was 50.47 billion yuan, up 3.5 percent month-on-month. The weighted average monthly interest rates for interbank funding, repo and outright repo were 2.22 percent, 2.11 percent and 2.115 percent respectively, down 0.02, 0.05 and 0.04 percentage points from one month ago. The interbank market interest rate continued to drop slightly amid comparatively loose fund supply.