A number of banks officially adjusted the interest rates of two types of deposits starting today, and some banks lowered them by 55 basis points
Recently, many banks such as Ping An Bank have successively announced that they will adjust the interest rates of call deposits and agreement deposits, and it will be officially implemented on May 15. Among them, Bank of Guilin has lowered the interest rates of deposit products of various terms and unit agreed deposit rates by as much as 55 BP (basis points) for call deposits.
Bank Intensive Adjustment
Two types of deposit rates
What are call deposits and agreement deposits? Generally speaking, these two types of deposits are similar to demand deposits, with better flexibility than fixed deposits and higher yields than demand deposits. The purpose of launching them is more to attract deposits. Notice deposit refers to the deposit business in which the deposit period is not stipulated and the bank is notified in advance when withdrawing, which is divided into two types: 1 day in advance and 7 days in advance. Agreed deposits are given the current interest rate for the part within the agreed amount, and the agreed deposit rate for the part exceeding the agreed amount.
“The interest rates of these two types of deposits are higher than that of ordinary demand deposits, and they are important deposit products for banks, but the higher interest rates are not conducive to alleviating the pressure on the net interest margin.” Zeng Gang, director of the Shanghai Finance and Development Laboratory, told reporters.
According to the reporter, as of May 14, Ping An Bank, Guilin Bank, Dongying Bank, Sichuan Tianfu Bank, Hebei Anping Rural Commercial Bank, Wuqiang Rural Commercial Bank, Xinjiang Burqin Kanas Rural Commercial Bank, Bazhou Shun Twelve banks including Fengcun Town Bank, Guiyin Rural Bank in Rongxian County, Guangxi, Luoshan Rural Commercial Bank, Yibin City Commercial Bank, and Shenzhen Guangming Shanghai Rural Commercial Rural Bank issued an announcement to adjust the interest rate of agreement deposits and call deposits. Among them, the Bank of Guilin’s call deposit deposit product interest rate and unit agreement deposit interest rate were lowered by 55 BP compared with the previous one.
The above-mentioned banks all mentioned that the adjusted deposit interest rate will be implemented from May 15. The reason why some banks mentioned the adjustment is based on the relevant requirements of the interest rate pricing self-regulatory mechanism.
“Since the establishment of the self-discipline mechanism for interest rate pricing, the previous two rounds of interest rate cuts have focused on demand deposits and time deposits, ignoring these deposits between demand deposits and time deposits. It is necessary to adjust the upper limit of interest rates on call deposits and agreement deposits at one time. Guarantee the effectiveness of deposit rate cuts.” Zhou Junzhi, chief macro analyst at Minsheng Securities, said.
Judging from the trend, the interest rates of these two types of deposits may still be lowered in the future. Dong Ximiao, chief researcher of China Merchants Union Finance, told reporters that it is still necessary to delay the pressure of narrowing interest rate spreads and stabilize income levels by lowering deposit interest rates and reducing debt costs. The first quarter regular meeting of the Monetary Policy Committee of the central bank proposed to “play the important role of the market-based adjustment mechanism of deposit interest rates”. Guiding commercial banks to moderately lower deposit interest rates is a concrete manifestation of the role of the market-based adjustment mechanism for deposit interest rates and is in line with policy orientation. It is expected that the deposit interest rate may still decline for some time in the future, but considering that the deposit interest rate is already at a low level, and with the recovery of the macro economy and the increase in financing demand, the room for future deposit interest rate decline is relatively limited.
Increase net interest margin for small and medium-sized banks
Create conditions
In terms of impact, interviewees generally said that for banks, adjusting the interest rates of these two types of deposits is conducive to reducing debt costs and improving their ability to serve the real economy.
“Driven by the interest rate pricing self-discipline mechanism, commercial banks lowered the upper limit of these two types of deposit interest rates, which will help reduce debt costs, increase net interest margins, and enhance the ability to serve the real economy.” Researcher at the Securities and Futures Research Institute of Central University of Finance and Economics, Inner Mongolia Yang Haiping, general manager of the bank’s research and development department, told reporters.
Zeng Gang also said that this round of adjustments to deposit interest rates will help reduce debt costs, allow deposit pricing to more reasonably match loan interest rates, and create conditions for commercial banks, especially small and medium-sized banks, to increase their net interest margins.
Luo Zhiheng, Chief Economist and Director of the Research Institute of Yuekai Securities, believes that agreement deposits are corporate business, and call deposits include both corporate and personal business, but there is a certain deposit threshold. Generally speaking, agreement deposits and call deposits are basically corporate demand deposits, which have little impact on ordinary depositors. For enterprises, compared with before the reduction, the interest rates of the two types of deposits will shrink to a certain extent, but if the deposit and loan interest rates can be lowered, it will help stimulate enterprise investment and reduce financing costs.
Dong Ximiao said that in the long run, the decline in market risk-free interest rates is the general trend. For individual residents, if there are more medium and long-term deposits in asset allocation, the rate of return may decline. Residents should balance the relationship between risks and benefits. If you are pursuing stable returns, you can properly allocate cash management wealth management products and currency funds in addition to deposits.