【CITIC Securities Financial】Social Financing Increases Year-over-Year, M1 Growth Rebounds Month-over-Month—Commentary on February 2026 Financial Data

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（Source: CSC Research Financial Team）

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Event: On March 13, the People’s Bank of China released financial data for February 2026. Among them, the new social financing in February was 2.38 trillion yuan, up 0.15 trillion yuan year-on-year; the growth rate of stock social financing was 8.2%, unchanged month-on-month. RMB loans increased by 0.90 trillion yuan, down 0.11 trillion yuan year-on-year. M1 growth rate was 5.9%, up 1.0 percentage point month-on-month; M2 growth rate was 9.0%, stable month-on-month.

Core Views:

Government bonds continue to lead, with credit issuance and off-balance-sheet financing warming under the social financing scope, resulting in a year-on-year increase in social financing, which is in line with expectations. In February, marginal improvement in corporate loans and some optimization of loan structure were observed. Due to the offset effect of the Spring Festival, retail loan issuance remains sluggish. We look forward to macroeconomic recovery and policy coordination to boost demand. M1 growth rate increased month-on-month, M2 remained high and stable, and the M2-M1 gap narrowed to 3.1%. In 2026, the positive fiscal policy tone and relatively loose monetary policy will continue, with government bonds remaining a key driver of social financing growth. It is expected that the full-year credit growth in 2026 will stay around 7%-8%, but the real improvement in banks’ fundamentals still depends on further recovery in credit demand and economic expectations.

Brief Summary:

1. Government bonds continue to lead, with social financing exceeding expectations. In February, social financing increased by 2.38 trillion yuan, up 0.15 trillion yuan year-on-year. Specifically, fiscal policy in 2026 remains proactive, with government bonds leading issuance. In February, new government bonds added 1.4 trillion yuan, mainly supporting social financing, though the high base last year resulted in a relatively smaller YoY increase. From January to February, total social financing increased by 9.6 trillion yuan, up 3.123 trillion yuan YoY. As of the end of February, the stock of social financing was 451.4 trillion yuan, with the growth rate stable at 8.2%. Considering last year’s active fiscal policy and peak government bond issuance in the first half, the stock growth rate is unlikely to accelerate significantly, but as debt reduction nears completion and demand-side policies take effect, credit issuance may slightly improve compared to the same period last year. Looking ahead, under a moderately loose monetary environment, the social financing scale growth rate is expected to remain around 8%, matching nominal economic growth.

The debt restructuring phase is nearing completion, with credit issuance under social financing scope exceeding YoY. In February, RMB loans under social financing increased by 848.4 billion yuan, up 195.6 billion yuan YoY. As debt restructuring approaches its end and banks have sufficient reserves for the “opening red” projects, marginal improvement in credit issuance is expected. For the full year, the People’s Bank of China mentioned in the 2026 work conference that “financial support should be strengthened for expanding domestic demand, technological innovation, and small and micro enterprises,” with credit growth expected to be roughly the same as in 2025, maintaining a growth rate of about 7%-8%. The pace may follow a “4321” pattern in 2026.

Government bonds continue to lead, but YoY growth is limited by high base. In February, new government bonds added 1.4 trillion yuan, 290.3 billion yuan less than last year. Local government bonds increased by 634.2 billion yuan, 208.5 billion yuan more YoY; special bonds increased by 484.6 billion yuan, 148.2 billion yuan more YoY. Since the beginning of the year, fiscal policy remains proactive, with steady issuance of national and special bonds supporting social financing. In terms of refinancing, local bonds and special bonds refinanced 491 billion yuan and 425.9 billion yuan respectively in February, down 216.2 billion yuan and 268.7 billion yuan YoY. The PBOC has stated in the 2026 work conference and recent financial expert forums that “continue to implement moderately loose monetary policy, increase countercyclical and cross-cycle adjustments to create a suitable monetary environment for sustained economic growth,” setting the overall tone for the year’s policies. Looking ahead, fiscal support is expected to remain strong, with government bonds continuing to be a major driver of social financing growth. (2) Off-balance-sheet financing decreased by 162.7 billion yuan in February, 191.8 billion yuan less YoY; entrusted loans decreased by 18.1 billion yuan, 4.7 billion yuan less YoY; trust loans increased by 30.9 billion yuan, 63.9 billion yuan more YoY; discounted bills decreased by 175.5 billion yuan, 123.2 billion yuan less YoY. (3) Direct financing increased by 197.5 billion yuan, 19.7 billion yuan more YoY; corporate bonds increased by 152.1 billion yuan, 18.1 billion yuan less YoY; stock financing increased by 45.4 billion yuan, 37.8 billion yuan more YoY.

2. Credit issuance shows differentiation, with marginal improvement in corporate loans and some optimization of loan structure; retail loans remain sluggish. In February, new credit was 900 billion yuan, down 110 billion yuan YoY. Corporate loans increased by 1.46 trillion yuan, up 415.7 billion yuan YoY; retail loans decreased by 650.8 billion yuan, down 261.7 billion yuan YoY.

Corporate short-term and medium-long-term loans showed marginal improvement, with good performance in the “opening red” period. Bill financing declined, improving the corporate loan structure. In February, short-term corporate loans increased by 600 billion yuan, up 270 billion yuan YoY; medium-long-term corporate loans increased by 890 billion yuan, up 350 billion yuan YoY. Bill financing decreased by 35 billion yuan, down 204.3 billion yuan YoY, significantly reducing bill scale and optimizing corporate loan structure to support the real economy. The YoY increase in medium-long-term loans is likely due to the implementation of many projects at the start of the year and the nearing end of debt restructuring, with the scale of replacement of stock loans by special bonds lower than last year. Going forward, policies such as “anti-involution,” improving the environment for private enterprises, and active fiscal policies “top-down” combined with “bottom-up” policies to promote consumption and boost domestic demand are expected to gradually improve the operating momentum and confidence of downstream enterprises, driving credit demand to recover. Under the continued positive fiscal and relatively loose monetary policies in 2026, corporate loan growth is expected to remain relatively stable.

Due to the offset effect of the Spring Festival, retail loan issuance remains sluggish. In February, retail short-term loans decreased by 469.3 billion yuan, down 195.2 billion yuan YoY; medium-long-term retail loans decreased by 181.5 billion yuan, down 66.5 billion yuan YoY. The offset effect of the Spring Festival led to declines in consumer and housing loans. Although the adjustment of purchase restrictions in first-tier cities temporarily boosted transaction volume, the market has not yet seen a clear recovery after the initial surge, and residents’ psychology of “buying on rising prices” keeps demand weak. Despite policies such as fiscal subsidies for consumer and business loans, under weak economic recovery, household income expectations remain subdued, and willingness to leverage is limited, posing challenges to credit growth. Future recovery depends on macroeconomic improvement and policy coordination to boost retail credit demand.

3. M1 growth accelerates, M2-M1 gap narrows. Due to the offset effect of the Spring Festival, deposit structure shows divergence. In February, M1 growth was 5.9%, up 1.0 percentage point quarter-on-quarter. M2 growth remained at 9.0%, stable month-on-month. The M2-M1 gap narrowed to 3.1%. The increase in M1 may be due to higher consumer willingness during the festival, accelerating the flow in demand deposit accounts, thus raising M1. However, this active fund movement mainly relies on consumption of deposits rather than credit-driven growth. From credit data, household leverage remains weak, with insufficient credit consumption motivation; households prefer using deposits over borrowing for holiday spending. In terms of deposits, new deposits increased by 1.17 trillion yuan, down 32.5 trillion yuan YoY. The structure shows that household deposits increased by 3.11 trillion yuan, up 2.5 trillion yuan YoY; corporate deposits decreased by 2.66 trillion yuan, down 1.76 trillion yuan YoY. The delay in year-end bonus payments compared to last year caused a transfer of funds from corporate to household accounts, leading to clear divergence. Fiscal deposits decreased by 350 billion yuan, down 1.61 trillion yuan YoY. Non-bank deposits increased by 1.39 trillion yuan, down 1.44 trillion yuan YoY; external market fluctuations and year-end cash hoarding led to reduced deposit shifting.

4. Investment Outlook: Government bonds continue to lead, with credit issuance and off-balance-sheet financing warming under social financing scope, exceeding YoY, in line with expectations. In February, credit issuance showed differentiation, with marginal improvement in corporate short-term and medium-long-term loans, and a reduction in bill scale, optimizing the corporate loan structure. Retail credit remains sluggish due to the offset effect of the Spring Festival, with expectations for macroeconomic recovery and policy coordination to boost demand. M1 growth accelerated month-on-month, M2 remained high and stable, and the M2-M1 gap narrowed to 3.1%. Looking ahead, the People’s Bank of China stated in the 2026 work conference that “continue to implement moderately loose monetary policy, increase countercyclical and cross-cycle adjustments to create a suitable monetary environment for sustained economic growth,” setting the overall policy tone. Fiscal support is expected to remain strong, with government bonds continuing to be a key driver of social financing growth in 2026. The debt restructuring phase is nearing completion, with diminishing impact on medium-long-term loans, and credit growth is expected to stay relatively stable. The PBOC has lowered the minimum down payment ratio for commercial housing loans to 30%, and policies such as continued subsidies for consumer and business loans are expected to support retail credit demand. Credit growth in 2026 is projected to stay around 7%-8%, with a genuine improvement in bank fundamentals still dependent on further recovery in credit demand and economic outlook.

Sector Allocation: Currently, with the bottoming out of actual operations and expectations in the banking sector, a focus on risk-averse, high-confidence, high-probability allocation strategies is key, further enhancing safety margins. Before an upward inflection in macro expectations, it is difficult for the sector to shift entirely to cyclical stocks. We remain optimistic about high-dividend strategies, as long-term funds such as insurance capital still have long-term allocation needs, with sector rotation driven by short-term fundamentals and dividend yield ratios. Specific stocks include: overseas banking sector, especially Hong Kong-listed international banks; domestically, focus on: 1) stocks with positive dividend rate changes and good fundamentals, previously constrained by dividend yield valuation; 2) stocks with no refinancing dilution risk, high dividend yield, and solid fundamentals; 3) state-owned large banks’ H-shares and A-shares; 4) stocks with limited refinancing dilution risk, capable of quickly replenishing through profit releases, and with some cyclical attributes; 5) continue to monitor high-quality cyclical stocks with strong fundamentals.

5. Risk Tips: (1) Economic recovery may fall short of expectations, weakening corporate debt repayment capacity, with some companies at risk of default, potentially exposing bank non-performing loans and deteriorating asset quality. (2) Risks in key areas such as real estate and local government financing platform debt could significantly impact bank asset quality and profitability. (3) The effectiveness of broad credit policies may be less than expected, and unsustainable rapid regional economic growth could adversely affect credit issuance. (4) Retail transformation may underperform, and large fluctuations in equity markets could impact wealth management businesses.

Report Information

Research Report Title: “Social Financing Exceeds YoY, M1 Growth Accelerates—February 2026 Financial Data Review”

Release Date: March 15, 2026

Publishing Institution: CITIC Securities Co., Ltd.

Analysts:

【Ma Kunpeng】SAC License No.: S1440521060001

【Li Chen】SAC License No.: S1440521060002

【Wang Xinyu】SAC License No.: S1440525070014

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