China Financials: May TSF shows that the trend of quality over quantity continues

Research evidence excerpt

China Financials: May TSF shows that the trend of quality over quantity continues

Update

June 12, 2026 05:16 PM GMT

Morgan Stanley Asia Limited+MChina Financials | Asia Pacific Richard Xu, CFA

Equity Analyst

May TSF shows that the trend Richard.Xu@morganstanley.comBeryl Yang +852 2848-6729

Research Associate

Beryl.Yang@morganstanley.com +852 3963-2224

of quality over quantity Chiyao Huang

Chiyao.Huang@morganstanley.com +852 3963-4624

continues Chenqian Liu

Chenqian.Liu@morganstanley.com +852 3963-0359

Key Takeaways

TSF growth moderated 0.1ppt in May, to 7.7% yoy, with continued support from

government bonds despite moderating RMB loan growth.

RMB loans added Rmb501bn in May (April: Rmb401bn decline), mainly supported

by bills. Household loans and medium- to long-term corporate loans saw net China Financials

Asia Pacific

decline. Industry View Attractive

Excluding bills, RMB loans would have had a net decline in May, likely owing to Related reports:

continued anti-involution efforts and reduced window guidance vs. last year. China Financials: Further rationalization in loan

Household deposit growth slowed to 7.5% yoy, with a shift in new savings growth with continued new household savings

towards other products, evidenced in strong non-FI deposit growth, up 29.6% shifting to investments (14 May 2026)

yoy. China Financials: Another Milestone Policy

Change – No More Quantitative Target for Despite slower headline TSF growth, M1 and M2 growth remained healthy – up

Inclusive SME loans (20 May 2026) to 5.5% yoy and flat at 8.6% yoy, respectively.

Quality over quantity continued in May, although some window guidance

towards end of May drove bill increase to support headline TSF number and

market sentiment a bit: Among Rmb501bn new loans added in May, bills increased

Rmb557bn.