Deposits decline at Big Four banks

New yuan loans tumbled to 385.2 billion yuan ($62.5 billion) in July, down sharply from the 1.08 trillion yuan extended in June, according to data released Wednesday by the People's Bank of China.

Over the same period, central bank figures also revealed a 1.98 trillion yuan decline in deposits, 1.5 trillion yuan of which fled savings accounts held with the country's Big Four commercial lenders.

There are several factors behind this drop in deposits. First, many banks roll out higher savings rates toward the end of the second quarter as a way to bolster their balance sheets ahead of first-half regulatory reviews. After the review period ends, so do the preferential offers, leading many savers to take their money elsewhere.

Second, online wealth management and investment products, such as Alibaba-backed Yu'ebao, likely absorbed a portion of the deposit drain. Other alternatives like P2P lending platforms attracted attention from investors as well.

Third, the bullish turn taken recently at China's stock markets is pulling idle capital out of deposit accounts and into equities.