SHANGHAI: A substantial increase in corporate deposits helped the city's financial institutions to a 13.7 percent year-on-year surge in the total for August, as funds returned from the soaring stock market.
The outstanding value of deposits at the city's financial institutions stood at 2.86 trillion yuan on August 31, the Shanghai branch of the People's Bank of China said.
August also saw more than 88.1 billion yuan in new deposits - the highest for the period and a year-on-year increase of nearly 44 billion yuan.
That went against the trend of funds being diverted from bank deposits to the domestic share market, whose benchmark Shanghai Composite Index is trading at around 5300 points - five times the level of early 2006.
"Yuan-denominated corporate deposits rose substantially at domestic banks in Shanghai," the central bank said yesterday. Deposits rose about 81 billion yuan last month, with 85 percent from banks' corporate clients.
State-owned banks saw an increase of 19.3 billion yuan for new corporate deposits, commercial lenders 28.6 billion yuan and financial firms 21.5 billion yuan.
The central bank said the increase of corporate deposits was due to the growth of business income, the backflow of money used to buy new shares, and the counter-flow of idle corporate funds caused by the central bank's four interest rate rises this year.
"Nationwide, the situation of supply outweighing demand was relieved last month thanks to the policy to eliminate superfluous capacity and the fast-growing economy," said Li Huiyong, an analyst at Shenyin Wanguo Securities Research Institute.
"As a result, business income has increased a lot in the past month," he said.
To "control money supply and credit and stabilize inflation expectations", the central bank raised the interest rate again on August 22. The one-year deposit rate is now 3.6 percent, while the one-year lending rate is 7.02 percent.
Source: China Daily
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