Consumer loans decline, banks switch assessment model; policy package helps financial consumption scenarios accumulate momentum.

Securities Times reporters Liu Xiaoyou and Xie Zhongxiang

Data from the central bank's financial institutions credit balance sheet shows that in the first five months of 2026, the total balance of residents' short-term and medium- to long-term consumer loans decreased by more than 1.1 trillion yuan. Securities Times reporters learned that facing increased pressure on consumer loan issuance, several bank retail line heads stated that "tasks are difficult to complete."

According to a Securities Times investigation, some banking institutions have adjusted their assessment direction for retail credit primarily consisting of consumer loans, no longer solely pursuing scale growth, but instead reducing joint loan businesses and strictly controlling credit asset quality.

It is noteworthy that since the beginning of this year, multiple national departments have continuously intensified measures to boost consumption, which is expected to accumulate new growth momentum for financial consumption scenarios.

Short-term consumer loans

Balance decline draws market attention

The decline in the household sector leverage ratio has attracted industry attention. Securities Times reporters reviewed relevant items in the central bank's credit balance sheet and noted that residents' personal short-term consumer loans fell from 9,490.077 billion yuan at the end of 2025 to 8,786.954 billion yuan at the end of May 2026, a decrease of about 703.1 billion yuan in the first five months.

Compared with medium- and long-term household loans, short-term consumer loans are closely related to changes in residents' cash flow. According to a seasoned banking and consumer finance industry observer, the decline in short-term consumer loans includes both the factor of residents actively reducing leverage and the impact of banks, consumer finance companies, and lending platforms compressing high-interest assets, stopping renewals, and lowering credit limits under regulatory pressure. Combining data from some bank online lending departments and consumer finance companies, the latter accounts for a larger proportion of this year's decline in short-term consumer loans.

Since the beginning of this year, the balance of medium- and long-term consumer loans has also declined. As of the end of May this year, the balance of medium- and long-term consumer loans was approximately 48.26 trillion yuan, a decrease of over 420 billion yuan compared to the end of last year.

It is worth noting that although the scale of consumer credit is under pressure, consumption scenarios are being continuously activated by policies. On January 25 this year, the State Council issued the "Work Plan for Accelerating the Cultivation of New Growth Points in Service Consumption," launching 12 measures to systematically deploy efforts to further optimize and expand service supply, cultivate new growth points in service consumption, and promote quality improvement and benefit to the people in service consumption. The Ministry of Commerce, the People's Bank of China, and the National Financial Regulatory Administration also jointly issued a document to strengthen coordination between commerce and finance, guiding financial institutions to focus on key areas of consumption and increase support.

Recently, a relevant official from the Ministry of Commerce stated that the trade-in of old for new consumer goods has played a positive role in benefiting people's livelihoods, expanding consumption, optimizing industries, and promoting circulation. The latest data released by the Ministry of Commerce shows that as of June 22, the trade-in program for consumer goods has driven cumulative sales of related goods to 5 trillion yuan, benefiting 630 million people, of which automobile trade-ins accounted for 63% of sales.

Financial consumption scenarios

Accumulating growth momentum

The quarterly macro leverage ratio report previously released by the National Institution for Finance and Development shows that the household sector leverage ratio dropped from 63.5% at the end of 2023 to 59% in the first quarter of 2026. In the first quarter of this year, the household sector debt growth rate was -0.4%, the first negative growth since the third quarter of 1995.

The decline in consumer loan balances has attracted attention from sell-side research reports. A recent research report released by Guosen Securities believes that based on data at the end of 2025, the ratio of residents' annual principal repayment on credit cards and consumer loans to disposable income is 8.68%, and the ratio of interest expenses (based on a 4.59% interest payment rate) to disposable income is 1.59%, with total principal and interest expenses accounting for 10.27% of disposable income. The core view of the report is that the dilemma of consumer loans and credit cards is highly positively correlated with residents' income. Against the current backdrop of slowing income growth, it is difficult to see a clear turning point in the short term.

A retail business head of a large state-owned bank's Shenzhen branch told reporters that from the bank's perspective, individual customers' demand for mortgage loans and consumer loans is still not high, and this situation will continue.

In fact, to hedge against the pressure of shrinking household credit, the policy toolkit has been continuously intensified since the beginning of this year. At the beginning of this year, the Ministry of Finance and two other departments issued a policy to optimize the implementation of fiscal interest subsidies for personal consumer loans, extending the implementation period to the end of 2026, and expanding the scope of support to include credit card bill installment business, with an annual interest subsidy rate of 1 percentage point. At the same time, they expanded the fields for subsidies, increased subsidy standards, and added handling institutions, continuously reducing the cost of personal consumer credit for residents.

As these policy combinations deepen step by step, new financial consumption scenarios are expected to accumulate growth momentum. A research report from China Galaxy Securities believes that the recently launched 2026 new energy vehicle下乡 (rural) initiative is expected to increase demand for new energy vehicles in counties and villages. A research report from Guotai Haitong Securities analyzes that the Ministry of Commerce and other departments are intensifying efforts to promote the entire chain to expand automobile consumption. This round of policies is expected to boost domestic demand and open up incremental space in the medium to long term.

Bank assessments

Shifting from "volume chasing" to "quality improvement"

Securities Times reporters learned from multiple surveyed banks that in the short term, "tasks are difficult to complete" is a common sentiment among respondents, but against the backdrop of declining consumer loan business, each institution's response strategy differs.

A relevant person in charge of a listed city commercial bank told reporters that the bank no longer assesses consumer loan scale. "We currently do not have a quantitative assessment. The main assessment directions are: first, increase self-operated lending and reduce joint loans; second, control asset quality and slow the generation of non-performing loans," the person said.

A retail department person from a listed bank's Shenzhen branch told Securities Times reporters that the bank's assessment model for consumer loans has shifted to "maintaining existing stock, with lower requirements for increment."

"The original assessment model was piecework, with specific lending numbers set: how many personal consumer loans, how many mortgage loans, how many inclusive small and micro loans. Now it has changed to assess the existing stock scale under the management of customer account managers, with a slight increase from the previous year's volume, which is relatively looser than before," the aforementioned bank retail department person said.

However, not all banks have moderately relaxed their assessment indicators. A relevant person in charge of a key sub-branch of a large state-owned bank in the Shenzhen area told reporters that the bank has not relaxed its assessment indicators for personal consumer loans and inclusive small and micro loans. "We still follow the plan set at the beginning of the year, and there is no 'dynamic adjustment.' In the first quarter, we completed about 70% of our personal consumer loan tasks, and the remaining 30% was added to the second quarter indicators. The assessment targets we need to complete in the second quarter are very high, and the pressure is great," the person said.

(Editor: Qian Xiaorui)

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