Statisticsof the PBC shows that the performance of the financial industry remained soundand stable in the first two months of 2004. The growth of money supply andloans accelerated, with incremental loans in both local and foreign currenciesincreasing by RMB55.3 billion yuan on a year-on-year basis. Deposits in thefinancial institutions increased by a large margin, with savings depositscontinuing to grow rapidly. Inter-bank market witnessed active transactions andinterest rate in the money market dropped.

 

Thegrowth of money supply accelerated. The annualized month-on-month growth rateof money supply was kept within the target of 17%. At end-February, broad money(M2) reached RMB22.71 trillion yuan, increasing by 19.4 percent, 1.3 percentagepoints higher over a year earlier and the previous month. Narrow money (M1)rose to RMB8.36 trillion yuan, increasing by 19.8 percent, 1 percentage pointhigher over a year earlier and 4.1 percentage points higher over the previousmonth. The Spring Festival holidays were in different months for this year andlast year, constituting the main reason for the higher growth of M2 and M1 inFebruary. Adjusted for seasonal factors, the annualized month-on-month growthrate of M2 was 15.6 percent, within the target of 17 percent for the wholeyear. Cash in circulation (M0) totaled RMB1.99 trillion yuan, increasingyear-on-year by 10.9 percent. Net cash injection in January and February reachedRMB14.7 billion yuan, RMB51.2 billion yuan less than the same period of lastyear.

 

Depositsin the financial institutions increased by a large margin, with householdsavings deposits in local currency exceeding RMB11 trillion yuan. Atend-February, outstanding deposits denominated in both local and foreigncurrencies in all financial institutions (including foreign-funded ones)reached RMB22.67 trillion yuan, increasing by 20 percent, 1.2 percentage pointslower than the growth in the same period of last year. RMB deposits totaledRMB21.46 trillion yuan, increasing by 21.5 percent. The cumulative increase ofdeposits in both local and foreign currencies increased by RMB634.4 billionyuan in January and February, RMB73.8 billion yuan more than the increaserecorded in the same period of last year. In particular, the cumulativeincrease of RMB deposits was RMB662.1 billion yuan, RMB91.8 billion yuan morethan the increase in the same period of last year.

 

Corporatedeposits in both local and foreign currencies stood at RMB7.61 trillion yuan atend-February, increasing by 20.6 percent, 1.4 percentage points lower from ayear earlier. Corporate deposits declined by RMB123.8 billion yuan in Januaryand February, RMB 12.4 billion yuan more than the decrease recorded in the sameperiod of last year.

 

Householdsavings deposits continued to grow rapidly. At end-February, outstandinghousehold saving deposits in both local and foreign currencies in all financialinstitutions (including foreign–funded ones) reached RMB11.75 trillion yuan,increasing year-on-year by 17.2 percent, with cumulative increase in the firsttwo months growing by RMB93.7 billion yuan over the same period of last year toRMB683.1 billion yuan. In particular, outstanding RMB savings deposits reachedRMB11.06 trillion yuan, increasing by 19.2 percent, 0.9 percentage pointshigher over a year earlier.

 

Thegrowth of loans accelerated, with incremental loans in both local and foreigncurrencies increasing by RMB55.3 billion yuan on a year-on-year basis in thefirst two months. Outstanding loans denominated in both local and foreigncurrencies in all financial institutions (including foreign-funded ones)reached RMB17.51 trillion yuan, increasing by 21.3 percent, 2.5 percentagepoints higher than the same period of last year and 0.7 percentage pointshigher over the previous month. In particular, outstanding RMB loans totaledRMB16.38 trillion yuan, increasing by 20.7 percent, 0.6 percentage pointshigher over the previous month, an annualized month-on-month growth rate of18.3 percent after seasonal adjustment. Outstanding loans in foreign currenciestotaled USD136.4 billion yuan at end-February, increasing by 30.3 percent.

 

 

Cumulativeincrease of loans in both local and foreign currencies including those extendedby foreign-funded financial institutions in the first two months totaledRMB509.2 billion yuan, an increase of RMB55.3 billion yuan over the same periodof last year. In particular, cumulative increase of RMB loans was RMB462.5billion yuan, increasing year-on-year by RMB24.6 billion yuan; cumulativeincrease of loans in foreign currencies was USD5.64 billion yuan, increasingyear-on-year by USD3.71 billion or RMB 30.7 billion yuan.

 

Interms of the structure of incremental RMB loans, growth of short-termagriculture loans increased by RMB30.4 billion yuan over the same period oflast year to RMB80.2 billion yuan; growth of short-term loans to otherenterprises increased by RMB25.2 billion yuan to RMB31 billion yuan; growth ofcapital construction loans increased by RMB30.5 billion yuan to RMB90.2 billionyuan; growth of commercial paper financing, medium-term working capital loans,short-term loans to the construction and business sectors decreased by RMB66.1billion yuan, RMB12 billion yuan, RMB19 billion yuan and RMB8 billion yuanrespectively.

 

InFebruary, the inter-bank market witnessed active transactions, with outrighttransactions continuing to increase. Turnover of RMB transactions in theinter-bank market reached RMB1.2818 trillion yuan in February The dailyturnover was RMB64.09 billion yuan, RMB3.58 billion yuan more than the previousmonth and RMB 14.84 billion yuan more than the same period of last month or anincrease of 30.1 percent. Due to the large amount of currencies that werewithdrawn from circulation and ample liquidity of the financial institutions,the monthly-weighted average interest rate in inter-bank borrowing market andbond repurchase market dropped by 0.14 and 0.2 percentage points from theprevious month to 2.24 percent and 2.23 percent respectively.

 

RMBexchange rate remained stable, being at 8.2770 yuan per US dollar at the end ofFebruary.