On September 1st, a number of national commercial banks lowered the deposit listing interest rate, which was another reduction after the national commercial banks lowered the deposit listing interest rate in early June this year. Compared with June, the deposit interest rate has been lowered even more, mainly for time deposits and certificates of deposit. For example, Industrial and Commercial Bank of China and Agricultural Bank of China lowered the interest rates of RMB time deposits for one year, two years, three years and five years to 1.55%, 1.85%, 2.2% and 2.25%, while they were 1.65%, 2.05%, 2.45% and 2.5% respectively.
The market has fully expected this deposit interest rate cut. According to the data released by the State Administration of Financial Supervision recently, the net interest margin of commercial banks in the second quarter was 1.74%, which has dropped to a low level in recent years. Wang Yifeng, chief financial analyst of Everbright Securities, believes that it is imperative to control the debt cost of the banking system in view of the downward pressure on the net interest margin of commercial banks.
On August 18th, when the three departments held a video conference on financial support for the real economy and prevention and resolution of financial risks, they proposed to play an important role in the market-oriented adjustment mechanism of deposit interest rates, enhance the sustainability of financial support for the real economy, and effectively play an active role in promoting consumption, stabilizing investment and expanding domestic demand.
To continue to promote the steady decline of entity financing costs, it is necessary to ease the pressure on the debt side of banks, and lowering the deposit interest rate has become the choice of many banks. According to the deposit self-discipline pricing mechanism, the member banks of the self-discipline mechanism refer to the bond market interest rate represented by the 10-year treasury bond yield and the loan market interest rate represented by the one-year loan market quotation rate (LPR) to adjust the deposit interest rate level reasonably.
The latest LPR quotation released on August 21st shows that the one-year LPR is 3.45%, down 10 basis points from last month. "This move will further guide enterprises and residents to reduce financing costs." Wen Bin, chief economist of Minsheng Bank, believes that in the context of the pressure on the bank’s asset-side yield, the subsequent central bank will continue to guide the deposit interest rate down to maintain the bank’s interest margin and profit margin. "The downward deposit interest rate is expected to promote the transformation of residents’ high savings to a certain extent, accelerate consumption and investment behavior, and promote a virtuous circle of economy and finance." Wen Bin said.
Rong Liu, the chief financial officer of China Construction Bank, recently said at the semi-annual results conference that the downward adjustment of LPR will lead to the downward trend of loan interest rate, which will put some pressure on the net interest margin of commercial banks, and the specific impact range and rhythm will vary due to the differences in product term structure of various banks. "Specific to CCB, since the repricing of loans, especially the repricing of personal loans, is mainly concentrated in the first half of the year, the impact of LPR downturn in the second half of the year is relatively small. According to preliminary calculations, the downward impact of LPR and the downward impact of deposit interest rates can roughly offset each other. " Rong Liu said.
The Report on the Implementation of Monetary Policy in China in the Second Quarter of 2023 issued by the Central Bank pointed out that, considering that the financial cycle and the economic cycle are often not completely synchronized, it will take some time for the exposure of bank credit risks, and there should be some financial preparation and risk buffer. Allowing banks to maintain their steady operations in a reasonable way can enhance their ability to continuously support the development of the real economy.
From the perspective of preventing financial risks, banks need to maintain a reasonable profit and net interest margin level, which is also conducive to enhancing the sustainability of commercial banks supporting the real economy. "From this perspective, the policy orientation hopes that the net interest margin of commercial banks can remain relatively stable; From our own point of view, we also hope that some measures can be taken to stop the decline in net interest margin or slow down the decline. " Rong Liu said.
Under the background of several rounds of downward adjustment of deposit interest rates, how should residents manage their finances? Dong Ximiao, chief researcher of Zhaolian, said that if there are more deposits in residents’ asset allocation, the income may decline; If you pursue relatively stable income, you can properly allocate cash management wealth management products or money funds outside deposits; If you want to get higher returns, you need to bear the corresponding risks, so you should fully understand the products and balance the relationship between risks and returns. (Economic Daily reporter Lu Min)