Bank large certificates of deposit are not fragrant?
Recently, as the traditional "deposit-sucking weapon" of commercial banks, large-value certificates of deposit are facing the dilemma of both issuance and interest rates.
According to data from rong360 big data research institute, in October, the number of large-value certificates of deposit issued by banks was 347, down 14.53% from the previous month. Among them, the number of new issuances of 3-year large-value certificates of deposit by banks was 92, accounting for a new low in recent years.
Photo: Rong360 Big Data Research Institute
In terms of interest rates, the average interest rate of large-denomination certificates of deposit for 1-year, 2-year and 3-year certificates of deposit has declined.
Why issuance and interest rates are falling
Analysts pointed out that near the end of the year, the amount of large-value certificates of deposit in banks is often not too sufficient, and the number of issuances in November and December is expected to be at a low level.
With the change in the self-discipline ceiling of bank deposit interest rates in June, the interest rate of large certificates of deposit, especially the long-end interest rate, has been difficult to return to the previous level, and commercial banks may face new pressure to meet the "reserve season" at the end of the year.
In June this year, the market interest rate pricing self-discipline mechanism optimized the way in which the self-regulatory ceiling of bank deposit interest rates was determined. Among them, the self-discipline ceiling of short-end fixed deposits and large-value certificates of deposit within half a year and less has increased, and the self-discipline ceiling of long-end interest rates for more than one year has decreased.
Reflected in the market, the long-end interest rate of large bank certificates of deposit in the second half of the year has been in the downward channel.
According to the data of Rong360 Big Data Research Institute, among the newly issued large-value certificates of deposit in October 2021, the average interest rate of 1-year is 2.278%, the average interest rate of 2.884% for 2 years, the average interest rate for 3 years is 3.517%, and the average interest rate for 5 years is 3.951%.
Among them, the average interest rate of 1-year, 2-year and 3-year large-denomination certificates of deposit all fell month-on-month, falling by 0.2bp, 0.6bp and 0.5bp respectively, continuing the downward trend in August and September.
From the perspective of different types of banks, in October, the interest rate of large certificates of deposit of each term of joint-stock banks and urban commercial banks was higher, and most of them implemented the upper limit of interest rates; the interest rate ceiling of state-owned banks was lower, and the interest rate of large certificates of deposit of each term was not high.
The analysis pointed out that since the adjustment of the deposit interest rate quotation method, the interest rate of the 3-year large-denomination certificate of deposit has fallen the most. Due to the low interest rate ceiling of state-owned banks, the overall interest rate of large certificates of deposit is significantly lower than that of other types of banks. The homogenization of large-value certificates of deposit in other banks is more serious.
However, in the case of the same interest rate, depositors are more inclined to buy large certificates of deposit from large and medium-sized banks, which makes it more difficult for local small banks to collect deposits.
Whether it will become the norm for large certificates of deposit
Will falling interest rates and shrinking issuance become the norm for large certificates of deposit?
In this regard, industry insiders generally said that in the context of the narrowing of bank net interest margins, major banks need to actively reduce high-cost liabilities, and this situation may continue in the short term.
Banks' reduction in the number of large certificates of deposit issued is not only in line with regulatory trends, but also a timely adjustment to their own business conditions.
It is expected that the issuance scale of large certificates of deposit will continue to decrease in the short and medium term, and there is room for further downward interest rates, but with the continuous adaptation and adjustment of banking institutions, the subsequent issuance scale and interest rate will gradually stabilize.
At present, the net interest margin of banks is still facing downward pressure, and it is not a stopgap measure to benefit the real economy, and it is an effective choice to reduce the cost of liabilities when the bank interest margin is under pressure.
From this point of view, it cannot be ruled out that the interest rate of large-value certificates of deposit will stop falling and rise in individual periods, but this is more likely to be a small probability event, rather than the norm.
Special thanks: Liu Yinping, analyst of Rong360 Digital Technology Research Institute, Su Xiaorui, senior analyst of Analysys, and Lou Feipeng, researcher of Postal Savings Bank of China.
Intern journalist Xu Yupeng
Edited by Han Yeqing