Under the background of the latest credit work symposium that "we must reasonably grasp the pace of credit issuance and make efforts moderately ahead", despite the continued slump in residents' credit, the market's expectations for a good start to credit in 2023 are still strong, falling to 9.6% at the end of last year The growth rate of social financing stock is also expected to bottom out.

　　Under the 2023 broad credit policy goal, with the medium-term lending facility (MLF) and loan market quotation rate (LPR) released in January remaining unchanged for the fifth consecutive month, the market has different expectations for the next step in reducing interest rates.

The growth rate of social financing is expected to bottom out

　　Although the total amount of financial data in December 2022 is weak, the credit performance of enterprises is outstanding, and the market expects that credit financing is expected to continue to develop in 2023.

　　UBS Securities predicts that credit growth will increase slightly in 2023.

　　The agency pointed out that, as set in the Central Economic Work Conference, it is expected that the government may continue to push up the steady growth of credit, including increasing credit support for infrastructure projects, small and micro enterprises, innovation and the green economy.

As far as real estate is concerned, the regulator has introduced various policy measures to increase financing and credit support for real estate developers and "unfinished" projects, and may further relax real estate credit to boost real estate demand.

Looking forward, the agency believes that real estate-related credit demand may improve, and credit demand related to infrastructure and manufacturing may moderately slow down. With the rapid restart of China's economy, consumption is expected to rebound this year, driving related credit demand to improve.

UBS also predicts that the general public budget deficit rate and the new quota for local government special bonds will expand slightly.

Therefore, in 2023, the steady growth of credit will be around 9.8%-10%, slightly higher than the growth rate of 9.5% in 2022.

　　Guosen Securities believes that the "turning point" of financial data is approaching.

The agency pointed out that with the transformation of the economy from "strong expectations" to "strong reality" and this year's fiscal "strengthening and improving efficiency", credit financing is expected to continue to increase, and the contribution of direct financing and government bonds will gradually become positive.

In addition, the "wide credit" policy continues to increase. At the credit work symposium held on January 10, the central bank required credit to be "moderately advanced", and through "asset activation", "liabilities continuation", "equity Supplement" and "Expected Enhancement" to improve the balance sheet of high-quality real estate companies.

　　Essence Securities also believes that the bottom of social finance may have appeared.

　　The agency pointed out that based on the interview record of Guo Shuqing on January 7 and the symposium on major bank credit work jointly held by the People's Bank of China and the China Banking and Insurance Regulatory Commission on January 10, it is expected that the focus of credit work in the first quarter of 2023 will still be on the development of policy-based financial tools, Support the financing needs of real estate companies and expand residents' consumption.

The current peak of the impact of the epidemic has passed, real estate financing and infrastructure policies have accelerated, and some local government special bonds are being issued recently, and the amount has increased compared with last year. The growth rate of social financing is expected to bottom out and rebound.

LPR downscaling space geometry

　　The much-watched Medium-Term Lending Facility (MLF) and the Loan Prime Rate (LPR) were both on hold in January, triggering market discussions on the room for further rate cuts.

　　China Merchants Securities believes that the current need to further reduce the MLF.

After the MLF is lowered, the room for lowering bank deposit rates will be opened up, and the cost pressure on the liability side of commercial banks will be substantially released.

　　The agency judged that the reduction of MLF may be implemented within the first quarter, and the quotation of LPR will also be reduced to guide the further downward space of financing costs in the real economy.

Judging from the logic of the central bank’s interest rate cut, the two starting points for the rate cut have not changed: First, under the background of weak demand, the interest rate cut will help expand credit demand.

According to the central bank's questionnaire for the fourth quarter of 2022, the loan demand index of manufacturing, real estate and other industries is still lower than the level of the same period in previous years, indicating that there is still room for further interest rate cut stimulus.

Second, under the condition of uncertain recovery prospects, interest rate cuts are conducive to building consensus and boosting market confidence.

　　Dongfang Jincheng also believes that the stability of MLF interest rates and LPR quotations in January 2023 will not affect the downward trend of financing costs in the real economy. Mortgage interest rates are also expected to continue their slight downward trend.

In order to support the property market to stabilize and recover as soon as possible, there is room for a reduction in the 5-year LPR quotation in the short term.

The agency judged that in the remaining two months of the first quarter, the quotation of LPR with a period of more than 5 years may still be reduced by 0.1 percentage points.

This will help promote the property market to show a trend of recovery around the middle of the year.

　　However, the market also has different judgments.

　　Ming Ming, chief economist of CITIC Securities, believes that after the establishment of the first dynamic adjustment mechanism for housing loan interest rates, the lower limit of housing loan interest rates in some cities has been substantially cancelled, and the need for short-term LPR reductions has been reduced.

Considering that the mortgage interest rate quotation is formed by adding points to the LPR, as the lower limit of mortgage interest rates in some cities is substantially abolished, the cost of commercial personal housing loans will be effectively reduced.

Among the three rounds of LPR price cuts in 2022, the two rounds in May and August achieved asymmetric cuts with a five-year adjustment range greater than one-year. It can be seen that the policy goal of lowering LPR is more to stimulate residents to buy houses and cars The demand for medium and long-term loans has picked up; with the establishment of a dynamic adjustment mechanism for mortgage interest rates, the cost of home purchases for residents may have been substantially reduced, and the necessity of LPR reduction under the sound policy tone has been reduced.

　　However, Mingming also pointed out that from the perspective of widening credit and cost reduction goals throughout the year, the situation of unstable residents’ expectations and weak financing demand structure has not yet been reversed, and the external constraints of my country’s wide currency have eased after the overseas interest rate hike cycle has slowed down. , superimposed on the central bank’s positive statement on financial support entities in the recent meeting, it does not rule out the possibility that there is room for LPR to be lowered under the MLF interest rate cut and other wide currency efforts in the subsequent period of the year.

　　Bank of China Securities believes that a comprehensive MLF interest rate cut may be difficult to effectively solve the current "pain point" of wide credit.

General industrial and commercial enterprises that are sensitive to interest rates have grown relatively fast in financing, and the marginal effect of continuing to cut interest rates is diminishing; the warming of real estate investment and financing mainly depends on the improvement of the sales side of the property market.

With the establishment of the first housing loan interest rate policy dynamic adjustment mechanism by the central bank and China Banking and Insurance Regulatory Commission, the downward flexibility of housing loan interest rates has increased, which has the effect of strengthening the stabilization of the property market.

However, the average mortgage interest rate continues to decline or further compress the net interest margin of commercial banks.

There is room for downward adjustment of mortgage interest rates, which can reduce the financing costs of market entities to a certain extent.