GF Securities: March social financing data growth rate exceeds expectations, driving the core factor of bank stocks is the external market environment.

GF SEC released a research report stating that the financial data in March was impressive, with the growth rate of social financing exceeding expectations and M1 growth rate significantly rebounding. However, the net issuance of fiscal deposits was less than expected. Considering that the net issuance in the first quarter significantly exceeded the same period last year, the implementation of "equivalent tariffs" is expected. The government will further strengthen its efforts to stimulate domestic demand. It is expected that the subsequent net issuance of fiscal deposits will be better than expected, and the improving trend of financial data is likely to continue. In terms of bank investment strategy, the core factor currently driving bank stocks is the changes in the external market environment. The uncertainty in the economic impact of the trade environment will make the bank sector have temporary relative returns. However, considering the downward trend in industry-wide performance in the first quarter reports, the likelihood of relative returns may be limited in terms of time and space. GF SEC's main views are as follows: Overall situation: the growth rate of social financing exceeded expectations, mainly due to credit demand exceeding expectations. Under the framework of loose monetary environment and vigorous fiscal stimulus to boost domestic demand, M1 and social financing rebounded as expected in March. The M1 growth rate in March rebounded significantly by 1.5 percentage points to 1.6%, while the M2 growth rate remained flat year-on-year, but the growth rate was lower than the bank's expectations, mainly due to the net issuance of fiscal deposits in March being less than expected. Management estimates trade risks and has reserved some policy measures for the current situation; the growth rate of social financing rebounded by 0.2 percentage points to 8.4%, exceeding the bank's expectation of 8.2%, mainly due to credit demand exceeding expectations. With the increase in stimulus intensity towards the demand side of the policy, the effect of investment portion on credit demand has gradually been reflected. Government sector: substantial fiscal efforts. In March, the government's net financing of bonds increased by 1.48 trillion yuan year-on-year, an increase of 1.02 trillion yuan; fiscal deposits decreased by 0.77 trillion yuan, a decrease of 0.05 trillion yuan year-on-year; the government's net financing of bonds and fiscal deposits was 2.25 trillion yuan, an increase of 1.03 trillion yuan year-on-year. The issuance of government bonds significantly exceeded the same period last year, while the net issuance of fiscal deposits was less than expected. With the implementation of "equivalent tariffs", the bank expects that the subsequent policies will further focus on stimulating domestic demand, stabilizing total demand through increasing consumer subsidies, accelerating the implementation of maternity subsidies, and expanding the degree of openness, and supporting asset price stability. Household sector: The recovery of real estate demand in the previous period drove the long-term credit demand of residents. In March, the release of long-term loans to residents has returned to a relatively high level compared to the same period last year, while short-term loans remained relatively stable year-on-year. With the gradual warming of the real estate sector, the improvement of long-term credit demand of residents has started to show. Looking ahead, the trade impact may have a short-term effect on the sentiment of residents buying houses, but the expected fiscal stimulus is likely to stabilize and promote the recovery of household demand. Corporate sector: The short-term credit demand for corporations increased significantly year-on-year, while corporate bonds increased less. In March, the year-on-year decrease in corporate social financing was 0.1 trillion yuan, the year-on-year increase in short-term credit for corporations was 0.46 trillion yuan, and the year-on-year decrease in corporate bonds was 0.51 trillion yuan. The decrease in corporate social financing is expected to be mainly due to the significant increase in fiscal expenditure improving corporate cash flow, with corporate deposits decreasing by 0.56 trillion yuan year-on-year. Non-bank sector: The deposits of non-bank financial institutions decreased significantly. This may be due to the reduction in fixed income asset allocation by residents and bank year-end liquidity management measures, leading to a contraction in the liability side of non-bank financial institutions and a decrease in non-bank deposits. Risk warning: (1) Economic performance is below expectations; (2) Financial risks exceed expectations; (3) Fiscal policy intensity is below expectations; (4) Policy control intensity exceeds expectations.