The rise of interbank assets dominated the increase of Chinese banking assets3 August, 2012, 17:17. Posted by Zarathustra
Yesterday, we wrote about the rise in interbank assets within the Chinese banking system.
First of all, we need to clarify that what we usually heard about net new loans figures in the monthly monetary statistics reports are the changes in total loans as in the “sources and uses of funds” accounts, which does not include loans made by policy banks and lending between banks, while what we are look at regarding the interbank assets come from the “balance sheet of other depository corporations”, which does include policy banks but exclude the central bank.
Banks lending among themselves are not included the the “sources and uses of funds” account. Let us say that the new loans figures derived from this source are loans to the “real economy”. The counterpart of these loans to the “real economy” in the “balance sheet of other depository corporations would be “claims on non-financial institutions” and “claims on other resident sector”. Although they are not exactly the same, the loans to “real economy” figures derived from these two accounts track each other quite well in general.
The lending figures derived from “claims on other financial institutions” and “claims on other depository corporations”, on the other hand, are what we call “interbank assets” here.
The chart below shows the breakdown of these. The reddish bars are monthly net new loans to the “real economy” derived from the “balance sheet of other depository corporations”. The bluish bars are monthly net new interbank lending. The red line is the monthly net new loans as reported in monthly monetary statistics. As you can see, the blue bits used to be relatively small compared to the red bits until 2010, and the increase of interbank assets exploded since late last year and early this year. For June, out of around RMB4 trillion of net new lending (as derived from the “balance sheet”), only about RMB1 trillion of that went to the “real economy”, quite consistent with the “sources and uses of funds” accounts, and about RMB3 trillion net new lending comes from the increase of “interbank assets”.
Source: People’s Bank of China
Alternatively, the total banking assets increased by about RMB4.6 trillion in June, RMB3 trillion of the increase came from these “interbank assets”.