China's bank lending and aggregate finance pulled back sharply in February from their all-time highs last month, as banks tend to scale back lending after a rush to frontload loans at the beginning of the year to win market share, data released by the People's Bank of China showed Friday.

Banks extended CNY1.45 trillion in new yuan loans in February, slightly underperforming the CNY1.5 trillion expectation and decelerating from January's record high of CNY4.92 trillion. Total social financing rose by CNY1.56 trillion, slowing from the historical high of CNY6.5 trillion set in January, also missing the market consensus of CNY2.25 trillion. Outstanding TSF rose by 9% by the end of February, compared with the previous 9.5%.

M2 money supply grew by 8.7% y/y, keeping the same pace as January and remaining at the lowest level since November 2021 (8.5%), though missing the 8.8% estimate. M1 increased by 12.5% y/y, rising from January's 5.9% reading. Shadow banking transactions decreased by CNY328.7 billion compared to a CNY600.8 billion expansion in the previous month.