March Financial Data Released: Social Financing Growth Remains High, Positive Changes in Funding Demand from Enterprises and Households

Today, the People's Bank of China released the financial data for March. At the end of March 2025, the balance of broad money (M2) was 3,260.6 trillion yuan, up 7.0% YoY, flat with the previous month. The balance of narrow money (M1) was 1,134.9 trillion yuan, up 1.6% YoY, 1.5 percentage points higher than the previous month-end. In terms of social financing, the outstanding social financing scale was 4,229.6 trillion yuan at the end of March 2025, up 8.4% YoY, 0.2 percentage points higher than the previous month-end. "While the financial system continues to increase monetary and credit supply, more positive changes have emerged on the demand side from enterprises and residents, jointly driving the rebound in loan growth in March," an authoritative expert told Cailian Press. Loans increased YoY, with personal housing loans growing rapidly against the backdrop of a "small spring" in the property market. Notably, at the end of March, the balance of RMB loans was 2,654.1 trillion yuan, up 7.4% YoY; RMB loans increased by 3.64 trillion yuan, 547 billion yuan more than the same period last year. Structurally, the balance of inclusive small and micro loans was 3.481 trillion yuan, up 12.2% YoY, and the balance of medium and long-term loans for the manufacturing sector was 1.48 trillion yuan, up 9.3% YoY. Loan rates remained at historically low levels. The weighted average interest rate for newly issued corporate loans (domestic and foreign currency) in March was about 3.30%, 45 basis points lower than the same period last year; the weighted average interest rate for newly issued personal housing loans (domestic and foreign currency) was about 3.10%, 60 basis points lower than the same period last year. Specifically, data showed that the production and operation prosperity of both the manufacturing and service sectors improved in March, with the manufacturing PMI reaching 50.5%, staying above the 50 mark for two consecutive months. Meanwhile, the implementation of major projects accelerated, with an increase in large projects worth over 10 billion yuan. "These positive factors are reflected in the credit market as a recovery in effective financing demand," a national bank told Cailian Press, noting that the construction progress of key projects in the western region has significantly accelerated, leading to a corresponding increase in loan demand. Since the beginning of the year, the cumulative loans issued to local key projects have increased by 67% YoY. In terms of personal loans, according to relevant market data, the activity of new and second-hand home transactions in many cities improved significantly in March, with the transaction area of second-hand homes in 30 key cities increasing by over 20% YoY. "The recovery in transactions has driven an increase in personal housing loan issuance," a branch of a state-owned bank in the eastern region told Cailian Press, noting that the bank's personal housing loan issuance in March roughly doubled compared to the same period last year, and the situation of early repayments has also eased significantly after the reduction in mortgage rates on existing home loans. In addition, the positive trend in consumer loans has also supported recent loan growth. Recently, various regions and departments have introduced many measures to vigorously boost consumption, and consumers are more willing to increase high-grade consumption. It is understood that banks have increased the supply of consumer loans while ensuring commercial sustainability, and have better met residents' consumer credit needs by enriching financial products and providing convenient services. However, some industry experts told Cailian Press that in recent years, China's financial support for effective consumer demand has been continuously increasing, and banks should maintain a reasonable and orderly competitive order, guard against low-price competition that cannot cover operating costs, and maintain rational pricing by sinking services, exploring customers, and expanding the market to promote the sustainable development of consumer finance. It is also important to note that the development of consumer finance fundamentally aims to expand effective consumer demand, expand consumption scenarios, and ensure that consumer loans are truly used to support consumption, achieving the policy intent of financial support for consumption. The acceleration of government bond issuance remains a support for social financing growth, and the capital replenishment of large banks is expected to leverage 4 trillion yuan in credit increments. In March alone, the increment of social financing scale was 5.89 trillion yuan, 1.06 trillion yuan more than the same period last year. Overall, the cumulative increment of social financing scale in Q1 2025 was 15.18 trillion yuan, 2.37 trillion yuan more than the same period last year. "The bulk of social financing scale is usually loans and government bonds. In March this year, in addition to loans, government bonds grew rapidly, also driving the continued increase in the growth rate of social financing scale," an authoritative expert told Cailian Press. Relevant data showed that new government bonds in March were nearly 1.5 trillion yuan, nearly 1 trillion yuan more than the same period last year. In particular, the issuance of special refinancing bonds for replacing hidden debt maintained a fast pace. In the short term, the replacement of financing platform debt to repay bank loans may affect the total credit, but in the long term, it is conducive to mitigating local debt risks, promoting the market-oriented transformation of financing platforms, and freeing up more local financial resources to enhance economic development momentum. Recently, the Ministry of Finance also announced the issuance of the first 500 billion yuan in special treasury bonds to support the replenishment of core tier 1 capital for large state-owned banks. An authoritative expert told Cailian Press that replenishing capital for large state-owned banks can increase the banks' safety cushion, better meet international regulatory requirements, and further enhance their ability to serve the real economy, with an expected leverage of 4 trillion yuan in credit increments in the future. For the next stage, the authoritative expert admitted that financial aggregate growth still has support. April is traditionally a "small month" for credit, and with the intensification of external shocks, industry insiders expect that the effective credit demand of some enterprises may pull back. However, the authoritative expert told Cailian Press that China's economy has strong resilience, and all aspects will continue to maintain strong policy support to help strengthen the domestic circulation. The financial sector is also taking multiple measures to stabilize financial support, support the exploration of domestic effective demand, and promote the reasonable growth of financial aggregates.