January Financial Data "Good Start" M2 Balance Growth Rate Reaches 9%, a Two-Year High

January is a peak month for banks to compete in loan disbursements for the “Opening Red” campaign. The financial data for the month also serves as a barometer of the economy’s early-year performance. According to the financial statistics report released by the People’s Bank of China on February 13, at the end of January, the broad money supply (M2), social financing scale stock, and RMB loans outstanding increased year-on-year by 9%, 8.2%, and 6.1%, respectively.

Among them, influenced by base effects and capital market trends, M2 growth rate reached the “9” mark, hitting a two-year high; the incremental social financing scale was 7.22 trillion yuan, setting a single-month record high.

Industry experts stated that since the beginning of the year, fiscal and monetary policies have been proactively implemented, with demand-side factors such as investment and consumption showing signs of recovery. Both M2 and social financing scale growth rates have remained at relatively high levels, significantly exceeding nominal GDP growth, effectively supporting a stable economic start to the year.

Fiscal and Financial Coordination

Rapid Growth in M2 and Social Financing

As of the end of January, the M2 balance was 347.19 trillion yuan, up 9% year-on-year.

Industry experts noted that the M2 growth rate at the end of January was 0.5 percentage points higher than the previous month and 2.0 percentage points higher than the same period last year. On one hand, there is a certain base effect, as M2 increased by about 5 trillion yuan in January last year, with a relatively low base in recent years; on the other hand, the high growth of M2 is also related to the positive capital market trends since the beginning of 2026. As the base effects gradually diminish, M2 trends are expected to stabilize.

The growth rate of social financing scale also remained high. By the end of January, the stock of social financing was 449.11 trillion yuan, up 8.2% year-on-year; in January, the incremental social financing was 7.22 trillion yuan, an increase of 166.2 billion yuan compared to the same period last year.

“Since the beginning of the year, macro policies have become more proactive and effective,” industry experts said. On one hand, moderately easing monetary policy continues to exert influence, with a series of new monetary and financial policies introduced to incentivize banks to increase credit to key areas; on the other hand, more active fiscal policies are showing strong and effective results, as reflected in financial data.

Government bond growth is a major driver of social financing growth. “In January, the proportion of government bond financing in the total social financing increment reached 13.5%, the highest since 2021,” industry experts said, noting that issuance of national bonds, local government general bonds, and special bonds all increased significantly.

Development of direct financing is accelerating. Experts noted that beyond government bonds, corporate bonds and equity financing channels are also expanding rapidly. Currently, the economy is accelerating the transformation of old and new drivers, with high-tech industries and strategic emerging industries rising quickly, requiring diversified financing channels—including equity and bond financing—to provide full lifecycle support.

Some companies stated that, considering factors such as funding costs and usage periods, they will adopt a “short-term loans + long-term bonds” model for future financing, issuing medium- and long-term bonds to meet long-term needs such as project investment and R&D.

Policy Support and Demand Recovery

Loan Growth Achieves a “Good Start”

Adhering to the concept of early disbursement and early returns, January is a peak month for banks to compete in loan disbursements for the “Opening Red” campaign. The loan disbursement volume in this month accounts for a significant portion of the annual total. How strong was this year’s “good start” in loans?

Overall, loan growth was reasonable. By the end of January, RMB loans outstanding reached 276.62 trillion yuan, up 6.1% year-on-year; in January alone, RMB loans increased by 4.71 trillion yuan.

“After adjusting for government bond replacement factors, the January RMB loan growth rate was about 6.7%,” industry experts said. Since the start of the year, the financial system has increased credit supply, supported by multiple favorable demand-side conditions, leading to steady growth in credit.

Experts noted that the first quarter typically sees higher loan disbursements, and early policy implementation can produce quicker results. For example, the People’s Bank of China lowered the interest rates on structural monetary policy tools in January, stimulating banks’ enthusiasm for lending to key sectors.

The steady growth in total credit volume is also attributed to a significant rebound in demand.

“After the start of the year, major projects have been launched intensively, driving increased project loans,” industry experts said. Recently, the National Development and Reform Commission announced an early batch of “dual” construction projects for 2026 and central budget investments, with local governments promoting early start and construction of major projects, providing project platforms and funding foundations to stimulate investment and promote credit disbursement.

Meanwhile, corporate loans are being upgraded to support the real economy. Data from the People’s Bank of China show that in January, loans to enterprises increased by 4.45 trillion yuan, with medium- and long-term loans rising by 3.18 trillion yuan, providing strong long-term funding support for manufacturing and emerging industries.

The release of consumer activity before the Spring Festival also supported steady growth in personal loans. Experts said that as the festival approached, diversified consumption demands such as holiday shopping, home renovation, and travel were released in large numbers, boosting personal loan growth. Recently, the Ministry of Finance and other departments optimized policies on personal consumption loan interest subsidies, helping to increase residents’ willingness to consume and supporting personal loan growth.

Low Financing Costs

Continued Optimization of Loan Structure

Loan interest rates remain low, helping enterprises operate with lighter burdens. In January, the weighted average interest rate on new corporate loans (both foreign and domestic currency) was about 3.2%, about 20 basis points lower than the same period last year; the weighted average interest rate on new personal housing loans was 3.1%, roughly unchanged from last year.

“Social financing costs remain low, reflecting the effectiveness of moderately easing monetary policy,” industry experts said. The 3.2% rate is 2.4 percentage points lower than the peak since the second half of 2018 during this rate-cut cycle. Low financing costs not only indicate relatively ample credit supply but also demonstrate the results of financial institutions providing reasonable benefits to the real economy, helping reduce corporate burdens and stimulate vitality and innovation.

The loan structure continues to improve, with financial resources increasingly flowing into high-quality development areas. The People’s Bank of China disclosed that by the end of January, inclusive micro and small business loans totaled 37.16 trillion yuan, up 11.6% year-on-year; service sector medium- and long-term loans excluding real estate reached 60.03 trillion yuan, up 9.2%, both growth rates exceeding the overall loan growth.

“While credit growth remains resilient, the trend of improving quality and shifting gears is becoming more evident,” experts said. The growth of technology loans, inclusive micro and small business loans, and manufacturing medium- and long-term loans continues to outpace overall loan growth, with the proportion of “five big articles” of finance increasing significantly.

Experts noted that the shift in credit flow from traditional sectors to emerging fields is a natural result of economic structural transformation and a core reflection of financial support for improving the quality and efficiency of the real economy. In this process, guided by market-oriented incentives, financial institutions are increasingly willing to optimize their funding structures, and their service capabilities are significantly enhanced.

(Article source: Shanghai Securities News)