February Credit Structure Divergence: Household Weakness Supported by Enterprise, Assisted Lending New Regulations Impact Continues

Due to factors such as the dislocation of the Spring Festival holiday, February’s resident loans faced pressure, while medium- and long-term corporate loans played the role of a “ballast stone.”

Recently, the People’s Bank of China released financial data for February, showing that RMB loans increased by 5.61 trillion yuan in the first two months. By sector, household loans decreased by 194.2 billion yuan, with short-term loans down by 359.6 billion yuan and medium- and long-term loans up by 165.4 billion yuan; corporate (enterprise) loans increased by 5.94 trillion yuan, with short-term loans rising by 265 billion yuan and medium- and long-term loans up by 407 billion yuan, while bill financing decreased by 90.89 billion yuan; loans to non-bank financial institutions decreased by 19.87 billion yuan.

On a single-month basis, RMB loans increased by 900 billion yuan in February, a decrease of 110 billion yuan compared to the same period last year. Specifically, corporate (enterprise) loans increased by 1.49 trillion yuan, up by 450 billion yuan year-on-year, indicating a relatively high credit climate; household loans decreased by 650.7 billion yuan, a larger reduction of 261.6 billion yuan compared to last year.

Resident loans under pressure

The dislocation of the Spring Festival significantly dragged down the figures for resident loans. After a positive scale last month, resident loans in February showed signs of contraction, with both short-term and medium- and long-term loans shrinking.

Data from the People’s Bank of China show that in February, short-term resident loans decreased by 469.3 billion yuan, 195.2 billion yuan more than the same period last year; medium- and long-term resident loans decreased by 181.5 billion yuan, 66.5 billion yuan more than last year.

The State Financial Supervision and Administration Bureau implemented the “Notice on Strengthening the Management of Commercial Bank Internet Loan Assistance Business and Improving Financial Service Quality” in October last year, strengthening supervision over platform operators, cooperation fees, and the comprehensive financing costs for borrowers. Continuous tightening of regulations may have disturbed the February figures for resident short-term loans. Industrial Securities Research reports that, combined with the regulatory bureau’s interviews with loan assistance platforms, the impact of new regulations on loan assistance may still be significant.

Tan Yiming, Chief Fixed Income Analyst at Tianfeng Securities, believes that resident credit remains relatively weak, partly due to seasonal factors, as the Spring Festival month is usually a slow season for real estate transactions. Attention should also be paid to the recovery of residents’ willingness to leverage.

Cumulatively, from January to February, resident loans decreased by 194.2 billion yuan, 24.89 billion yuan less than the same period last year, below the average of 3.03 trillion yuan over the past three years. Short-term loans are the main drag. Although medium- and long-term loans increased by 165.4 billion yuan in the first two months, the overall growth was limited.

Wang Yunjin, Chief Financial Researcher at Guangkai Research Institute, believes the core reasons are still weak income expectations and slow bottoming of the real estate market. In February, the search volume for new homes in 60 key cities increased slightly by 1.2% month-on-month, but the decline year-on-year remained at a low 19.8%. Although the 30-city commercial housing market saw a slight rebound in home purchases, the average price still declined month-on-month, and market confidence has not fully recovered. Additionally, the recovery of consumption after the Spring Festival has been slow, with lagging implementation of consumer subsidy policies, and residents’ willingness to borrow for consumption remains low.

Looking ahead, Wang Yifeng, Deputy Director of Everbright Securities Research Institute, believes that the traditional “small spring” peak season for real estate sales will likely see significant improvement in transaction volume and prices compared to February. After the holiday, Shanghai introduced new policies to relax restrictions on home purchases, which is expected to improve market expectations and further release rigid and improving housing demand. With the traditional peak season and regional policy support, the real estate market in March may see a slight rebound, providing some support for mortgage lending.

Corporate loans continue to serve as a “ballast stone”

February is usually a slow month for credit, especially with a longer Spring Festival holiday this year, but corporate medium- and long-term loans still performed better than last year. Corporate loans continue to act as a “ballast stone,” especially with a clear boost from medium- and long-term loans.

“Almost all new credit is in the form of corporate medium- and long-term loans,” said Zhang Xu, Chief Fixed Income Analyst at Everbright Securities. He believes that the increase in medium- and long-term corporate loans best reflects business confidence and willingness to invest. Generally, a higher proportion of such loans in total new RMB loans indicates better credit quality. In February, medium- and long-term corporate loans accounted for 98.9% of new RMB loans, significantly higher than 53.5% last year, and this trend has been rising since October last year, indicating an improvement in credit quality.

Data from the People’s Bank of China show that in the first two months, corporate sector loans increased by 5.94 trillion yuan, 120 billion yuan more than last year; of which, medium- and long-term loans added 4.07 trillion yuan, accounting for over 60%. In February alone, corporate sector loans increased by 1.49 trillion yuan, up 450 billion yuan year-on-year, with both short-term and medium- and long-term loans showing significant growth.

Zhou Guannan, Chief Fixed Income Analyst at Huachuang Securities, believes that the performance of medium- and long-term corporate loans is not weak, possibly related to project construction at the start of the year and the efforts of policy-based financial instruments. After weak performance at the end of last year, February saw an increase of 890 billion yuan in new medium- and long-term loans, up 3.5 trillion yuan year-on-year. Short-term loans returned to seasonal levels, with an increase of 600 billion yuan, up 2.7 trillion yuan year-on-year, reflecting resilient short-term operational needs of enterprises.

Early-year macro policies have played a significant role. Tan Yiming notes that, on one hand, the National Development and Reform Commission has issued a list of “dual” construction projects for early approval in 2025, with projects starting in the new year, potentially stimulating supporting financing demand; on the other hand, the new policy-based financial instruments launched in Q4 last year and the structural monetary policy tools at the start of the year may also provide support.

Corporate financing demand is expected to remain stable

In recent years, the high credit growth during the “good start” phase has been tempered. In February, new RMB loans totaled 900 billion yuan, compared to 1.01 trillion yuan last year.

“Due to the Spring Festival holiday, there were significantly fewer working days in February this year compared to last year. Under this context, the credit increase in February can still be roughly comparable to last year, indicating that the current credit growth situation is better than last year,” said Zhang Xu.

He believes that credit growth is not about increasing as much as possible, but about creating a suitable monetary and financial environment for stable economic growth and high-quality development. Achieving a balance between social financing scale, money supply growth, economic growth, and inflation expectations is key. Financial institutions should act based on actual conditions, follow regulations, and further reduce the focus on point-in-time indicators like deposits and loans, increasing the proportion of average daily figures, and serving the real economy more solidly.

Zhang Xu advocates abandoning unnecessary “involution” in credit scale, which can help improve credit quality.

Recently, expanding policy-based financial instruments has become a policy highlight. The Government Work Report for 2026 proposed issuing 800 billion yuan of new policy-based financial instruments, an increase from the 500 billion yuan in Q4 2025.

According to a report from Industrial Securities, in the early stages, this instrument will boost social financing figures through entrusted loans, with a lagged effect on medium- and long-term corporate loans. The scale of incremental growth should not be overestimated. After the 500 billion yuan capital injection in October 2025, entrusted loans surged by 165.4 billion yuan, reaching a record high of 20.3% of social financing that month; however, its impact on medium- and long-term corporate loans was delayed, mainly showing up from November 2025 to January 2026.

Analysis indicates that the impact of this instrument on corporate medium- and long-term loans in 2025 has weakened compared to previous rounds and is expected to continue into 2026. Therefore, despite the potential increase to 800 billion yuan, expectations for corporate medium- and long-term loans should not be overly optimistic.

Wang Yunjin believes that, with the continued implementation of growth-stabilizing policies, corporate financing demand will remain stable, and resident sector credit is expected to gradually recover with improvements in employment and income. Social financing and credit increments will steadily rise, further supporting stable economic growth. Overall, it is estimated that in 2026, new credit will exceed 17 trillion yuan, with a growth rate of about 6.3%; social financing increments will reach around 38 trillion yuan, with a stock growth rate of about 8.6%; and M2 growth will stay around 8.4%.

(This article is from First Financial.)