Open source securities: corporate credit growth exceeds seasonal trends, credit distribution trends may continue before placement.

Open source securities released a research report stating that in recent years, there has been a significant pre-loading of credit, and the momentum of the New Year may increase this year. The proportion of credit investment in January may be the highest in recent years, coupled with the stabilization of new lending rates for enterprises/individual housing, which may drive both quantity and price ends and promote bank operations repair. In addition, banks with prominent wealth management business during the economic recovery process, as well as small and medium-sized banks in active regional financial environments, will benefit more under the stable growth policy environment. The main points of the open source securities are as follows: Corporate credit growth exceeded seasonal expectations in December, with the proportion of Q1 investment in 2026 expected to be the highest in recent years. In December, RMB loans increased by 910 billion yuan year-on-year, an increase of 80 billion yuan fewer than the same period last year, with a balance growth rate of 6.4%, remaining flat month-on-month compared to November. Although credit investment at the end of the year slowed down, the credit growth rate remained stable under the weakening influence of debt reduction: (1) Influenced by factors such as LPR reduction and intensified customer competition, banks have significantly pre-loaded credit investment in recent years, with the fourth quarter being an important reserve time for the New Year projects. Banks may postpone some projects to the New Year to avoid fierce customer competition at the beginning of the year, while also reducing the assessment base for that year; (2) The policy on debt reduction started in the fourth quarter of 2024, and the replacement process had a relatively significant impact on the scale of credit, but the pace of debt reduction in the fourth quarter of 2025 was weaker than the same period in 2024. Looking at different sectors, the structure of overall corporate loans improved, while the willingness of residents to borrow remained weak: (1) Corporate loans in December increased by 580 billion yuan year-on-year, with short-term and medium- to long-term loans each increasing by 390 billion and 290 billion yuan year-on-year. While the low base effect and policy financial tools contributed, it is still to be observed whether there will be substantial recovery in corporate credit demand. In addition, the year-on-year increase in low-yield bills was 100 billion yuan less, and the new loan structure was relatively optimized; (2) In December, residents decreased by 441.6 billion yuan year-on-year, with both short-term and medium- to long-term loans decreasing. The decrease of 161.1 billion yuan year-on-year in short-term loans was partially influenced by the fiscal interest subsidy policy implemented in September and the internet consumption activities in November (such as Double 11) which may have overdrafted some of the demand for consumer credit in December. The year-on-year decrease of 290 billion yuan in medium- to long-term loans reflected the weakness in mortgage demand in an environment where housing prices have not yet stabilized, as well as the fact that some residents used year-end bonuses to repay mortgages early, putting pressure on mortgage growth. Looking back at 2025, with the expectation of LPR reduction and weak demand background, banks had a strong willingness to put out credit at the beginning of the year, with the proportion of RMB loans in Q1 of 2025 reaching 60% of the annual total. The bank believes that this trend may continue in 2026, with fierce competition among banks in the initial credit investment at the beginning of the year, and it is predicted that the proportion of credit investment in Q1 of 2026 may reach the highest level in recent years. The slowdown in government bond issuance dragged down social financing in December, while the new lending rates for corporate loans remained stable. In December, social financing increased by 2.2 trillion yuan, a decrease of 646.2 billion yuan year-on-year; the growth rate of outstanding balance was 8.3%, down 0.2 percentage points month-on-month compared to November. The growth rate of social financing has been declining continuously since July, with a cumulative decline of 0.7 percentage points from the peak in July. Structurally, the slowdown in government bond issuance in December became a drag, while loans became the main contributor to incremental social financing this month: (1) New government bonds issued 683.3 billion yuan in December, the lowest level for the year (only higher than in October). Influenced by the pre-loading of government bond issuance earlier in the year, the deceleration of local government bond issuance in the fourth quarter, coupled with the higher base effect formed from the debt reduction work in 2024 beginning in the fourth quarter, government bonds increased by a significantly lower margin of 1.07 trillion yuan year-on-year in December. The bank expects that in Q4 of 2026, fiscal policy will continue to be front-loaded, and government bonds will remain the main driver of incremental social financing; (2) In terms of RMB loans, they increased by 140.2 billion yuan year-on-year, driving the growth of social financing for that month. December is usually a slow month for credit growth, and whether this excessive seasonal growth can continue remains to be seen. Additionally, in terms of pricing, the new lending rates for corporate/personal housing loans in December were both 3.10%, remaining flat for consecutive months. Under pressure on interest rate spreads, banks gradually lowered interest rates on low-interest loans, while some banks migrated their credit customer base from top-tier to mid-tier, boosting loan profitability, which together stabilizes new lending rates; (3) Corporate bond financing increased by 154.1 billion yuan in December, an increase of 170 billion yuan year-on-year, and direct financing channels also contributed to the growth of social financing. M1 growth rate declines, while the phenomenon of residents' deposits moving to the capital market is still to be observed. In December, M2 year-on-year growth was 8.5%, an increase of 0.5 percentage points month-on-month; M1 growth year-on-year was 3.8%, a decrease of 1.1 percentage points month-on-month. Although M1 growth rate has continued to decline since September, the absolute level remains higher than at the beginning of the year. The upward trend in the M2-M1 gap does not necessarily mean a weakening of economic activity, mainly due to the influence of a high base: (1) In December 2024, there was a significant debt reduction process, which raised the base due to debt funds flowing into corporate current accounts; (2) Fiscal deposits in December increased by 290.4 billion yuan year-on-year, possibly indicating that end-of-year fiscal spending was not as strong as the same period in 2024, but as the debt reduction work in 2026 began to progress, M1 still showed a rising trend; (3) Non-bank deposits increased significantly by 2.84 trillion yuan year-on-year, mainly due to the low base effect of the interbank current deposit rates being placed under self-regulation in 2024, combined with the year-on-year increase of 390 billion yuan in household deposits. The bank believes that the migration of household deposits to the capital market still needs to be observed. Risk Warning: Downward trend in macroeconomic growth, policy implementation falling short of expectations, etc.