Many banks will cut deposit interest rates and reduce debt costs to open the way for profit-making entities
2022-04-25 10:27:00Source: First Financial
Banks’ reduction in debt costs is expected to gradually land, or pave the way for greater support for the real economy.
The first financial reporter learned from a number of banks that on April 25, there will be an intensive drop in the interest rate of bank deposits. The main body of adjustment is both large state-owned banks and joint-stock banks. The scope of adjustment is mostly for medium and long-term deposits and large-denomination certificates of deposit. The drop interval is mostly 5BP ~ 15BP (base point). The latest list of deposit products provided by the staff of a large state-owned bank shows that the floating upper limit of interest rates will be lowered by 10BP for 2-year time deposits and 3-year and 5-year certificates of deposit respectively from that day. The 3-year product rate will drop to 3.25% from 3.35%.
In fact, the reporter learned earlier that with the tightening of supervision, falling interest rates, and increasing pressure on interest margins, most banks have actively or passively reduced the amount of large-denomination certificates of deposit. Certificates of deposit have become more scarce and “difficult to grab”. At present, among joint-stock banks, the interest rate of three-year large-denomination certificates of deposit has dropped to 2.9%.
Zeng Gang, director of the Shanghai Finance and Development Laboratory, believes that the fundamental purpose of reducing the cost of banks’ liabilities through marketization rather than lowering the benchmark interest rate by the central bank is to improve the ability to benefit the real economy. Dai Zhifeng, director of the Zhongtai Securities Research Institute, also pointed out that by reducing the cost of deposits in small and medium-sized banks, the asset-side pricing of small, medium and micro enterprises can be achieved, but the effect remains to be seen. For banks, if the industry generally lowers the deposit interest rate, it can drive the net interest margin and thus increase the net profit, and the impact of deposit business volume will be limited.
April 25 is a window period
“Ordinary deposits will be lowered from the 25th, the 3-year fixed deposit interest rate will be reduced from 3.5% to 3.45%, and the large-denomination certificates of deposit will be reduced from 3.55% to 3.5%. This is tentatively implemented.” A national joint-stock bank in Beijing The customer manager said that in addition to the 3-year deposit products, the 1-year and 2-year ordinary deposit interest rates will also be generally lowered.
In addition, the account manager of a large state-owned bank in Beijing showed the customer a list of the latest products, which clearly lowered the upper limit of the interest rate floating range for some deposit products on the 25th, including a 10BP reduction for 2-year time deposits above 10,000 yuan (inclusive) To 2.50% (the central bank benchmark 2.1% + 40BP), the 2-year starting deposit of 200,000 yuan and the 3-year starting deposit of 500,000 yuan are also reduced by 10BP to 2.60% (the central bank benchmark 2.1% + 50BP) and 3.25% (the central bank benchmark). 2.75%+50BP).
However, a local customer manager of China Merchants Bank in Beijing said that the interest rate of some of the bank’s deposit products has been lowered. It can be seen from the China Merchants Bank App that the interest rate of the bank’s 3-year (starting at 200,000 yuan) large-denomination certificate of deposit has dropped to 2.90%, which is the same as the ordinary 3-year (starting at 1,000 yuan) time deposit.
Since the central bank launched the reform of the deposit interest rate quotation mechanism in June 2021, the yield of large-denomination certificates of deposit has been greatly affected. The interest rate for 3-month to 1-year periods in the month was significantly increased, and the interest rate for 2-5 years was significantly reduced. The original average interest rate was The interest rate for 3-year large-denomination certificates of deposit above 4% is capped at 3.55%. However, the short-term and medium-term interest rates rose slightly as a whole, and most banks set long-term products in accordance with the new interest rate ceiling, especially for small and medium-sized banks that are under pressure to attract reserves.
However, in the past two years, with the changes in the interest rate environment, the impact of the epidemic, and the pressure of reducing fees and making profits, banks have generally changed their strategy of attracting deposits. It has become a trend to optimize the deposit structure and reduce the proportion of high-cost deposits. Among them, the scale of structured deposits has shrunk significantly due to the influence of supervision. , the cost of large-denomination certificates of deposit between ordinary time deposits and structured deposits has also been reduced in size, and interest rates have entered a downward channel with the environment.
Since the beginning of this year, the quotas and interest rates of large-denomination certificates of deposit have experienced further declines in major banks. Especially in the context of increasing fluctuations in the returns of funds and wealth management products, depositors often “cannot grab” large-denomination certificates of deposit. The account manager of a large bank said that the bank released a batch of large-denomination certificates of deposit with an interest rate of 3.35% in early April this year, but it has since dropped to 3.25%. Currently, the corresponding account manager needs to help make an appointment to buy it. The account manager of another joint-stock bank also said that the bank generally releases the quota at 10 am every day and needs to grab it regularly.
The large-denomination certificates of deposit with an interest rate of 3.25% are now rare in the market. Among the big banks, taking China Construction Bank as an example, the interest rate of the bank’s 3-year and 5-year time deposits starting from 50 yuan is 2.75%, and the 3-year large-denomination certificate of deposit has been reduced to 3.25%; among joint-stock banks, except for investment promotion Outside the bank, the interest rate of Everbright Bank’s current 3-year large-denomination certificate of deposit from 200,000 yuan remains at 3.5%, and the interest rate of Ping An Bank’s 3-year product with a minimum deposit of 200,000 yuan is 3.40%. But on the whole, the 2-year and 3-year products listed by most banks have been sold out.
Improve the ability of profit-making entities
From the perspective of industry insiders, market-oriented adjustment of the deposit interest rate under the condition that the central bank’s interest rate benchmark remains unchanged is already expected.
Just on April 15, it was reported that some small and medium-sized banks received a notice from the market interest rate pricing self-discipline mechanism, encouraging small and medium-sized banks to lower the floating ceiling of deposit interest rates by about 10BP; this requirement should not be mandatory, but banks that make adjustments may Its macro prudential assessment (MPA) assessment is favorable.
Industry insiders generally believe that the current economy is facing greater downward pressure, difficulties and challenges have increased significantly, the necessity of reducing corporate financing costs has increased, and the requirements for banks to transfer profits have also increased. However, since the MLF (Medium-Term Lending Facility) operating interest rate was lowered in January this year, the policy interest rate has remained unchanged for several consecutive months, and the LPR (loan market quoted rate) quotation is difficult to significantly reduce.
In fact, since the self-discipline mechanism of market interest rate pricing in June last year changed the self-discipline ceiling of deposit interest rate formed by “deposit benchmark interest rate x multiple” to “deposit benchmark interest rate + basis point”, banks have already met the conditions to actively reduce the cost of debt. Many institutional sources pointed out that the combination of this adjustment and the “controlled” RRR cut by the central bank can reduce the financing cost of the real economy from both total and structural aspects.
Zeng Gang told reporters that promoting the overall downward trend in bank deposit pricing through the self-discipline mechanism can reduce the cost of bank liabilities while reducing the impact on the capital market and other aspects. He believes that the core principle of this adjustment model is to achieve a further decline in the cost of loans, thereby improving the ability of banks to transfer profits to entities. The Everbright Securities Zhang Xu team also believes that considering that the central bank’s reduction of the benchmark deposit interest rate has a great impact on prices and exchange rates, and is not conducive to the integration of the benchmark deposit interest rate and market interest rates, the correct solution is to give full play to the efficiency of the LPR reform and promote deposits. Interest rate market.
Dai Zhifeng also pointed out that the main purpose of the market interest rate pricing self-discipline mechanism is to reduce the cost of deposits in small and medium-sized banks, so as to realize the downward pricing of small and medium-sized enterprises on the asset side. However, considering the current fierce competition for deposits, the pressure on small and medium-sized banks to attract deposits and other factors may be limited.
Zhang Xu believes that banks are encouraged to actively lower the floating ceiling of interest rates in the form of MPA rewards. If more banks lower the floating ceiling, the self-discipline ceiling of deposit interest rates may also be lowered, that is, to achieve a situation where “advanced” drives “later ones”.
Regarding the impact of the lowering of the deposit cap on the net interest margin and net profit of banks, the team of Qiu Guanhua of Zheshang Securities predicts that the current deposit pricing caps of the four major banks are 10BP lower than other banks, and 25BP lower than regular ones, and the downward elasticity of pricing is relatively small. . Assuming that the pricing of deposits with a maturity of more than one year in the four major banks drops by 5BP, and other banks drop by 10BP, the bank interest margin can be improved by about 0.9BP. Small and medium-sized banks with a high proportion of medium and long-term deposits have greater potential for improvement. In terms of business volume, Dai Zhifeng believes that considering the fierce competition, if industry interest rates are generally lowered, the impact on bank deposits is expected to be limited.