Here's proof that China's shadow banking curbs are taking effect

New loans exceeded expectation.

According to CCB International Securities, ,onetary data indicated a slowdown in shadow banking following regulatory tightening.

On-balance sheet lending is strong and well above expectations.

Here's more from CCB International Securities:

New loans of RMB870.8b in May were better than the expected RMB750b. Mortgage loans, FAI loans and bill financing all showed signs of recovery in May, led by the PBOC’s call to support mortgage loans and the central government’s mini-stimulus in infrastructure and affordable housing.

State-owned banks are still active in mortgage loans while smaller banks are shifting credit resources to SME lending.

Trust loans showed weakness while bond issuances remained strong. The PBOC, CBRC and CSRC have been more hawkish towards shadow banking by tightening regulations on interbank business, trust companies and subsidiaries of fund firms. We expect bond issuances will keep a strong momentum so as to hedge the tightening impact caused by shadow banking curb.