On December 22, the five major state-owned banks have lowered the listed interest rates of RMB deposits in the latest RMB deposit interest rate table posted on their official websites. This also means that the third deposit listing rate cut in the year has officially arrived.
On the same day, Bank of China, Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of Communications, China Construction Bank and other state-owned banks successively issued announcements on their official websites to reduce the listed interest rates of RMB deposits from now on. According to the latest RMB deposit interest rate table of various banks, the current three-year fixed deposit interest rate of banks is 1.95%, down 25BP from the previous one, entering the "1 era", and the five-year time deposit interest rate is 2%, down 25BP. In addition, the interest rate for 1-year fixed deposits will be reduced by 10BP to 1.45%, and the interest rate for 2-year fixed deposits will be reduced by 20BP to 1.65%.
The reporter of Nandu Bay Finance Society combed and found that in the opinion of the interviewed experts, the pressure on the interest rate spread of the banking industry is still the main reason for the reduction of deposit interest rates. The decline in deposit rates may encourage enterprises and residents to expand investment and consumption to a certain extent. However, some interviewed experts pointed out that the current consumer confidence is still at a low level, and it is difficult to directly drive deposits to investment or consumption by lowering the deposit interest rate.
If you deposit 100,000 yuan for 3 years, the interest will be 750 yuan less
According to the official websites of state-owned banks in various countries, the interest rates of three-month, six-month and one-year fixed deposits and lump sum deposits were reduced by 10BP, and the one-year interest rate was reduced to 1.45%, the listed interest rates of two-year lump sum deposit and lump sum time deposits were reduced by 20BP to 1.65%, and the listed interest rates of three-year and five-year lump sum fixed deposits were reduced by 25BP to 1.95% and 2.00% respectively. The interest rate of the lump sum deposit, the lump sum deposit and the interest rate of the principal deposit will be reduced by 10BP, and the interest rate of the call deposit will be reduced by 20BP.
At the same time, some joint-stock banks lowered the listed interest rate of RMB deposits on December 22. The listed interest rates of one-year, two-year, three-year and five-year lump sum deposit and withdrawal time deposits of China Merchants Bank were 1.45%, 1.65%, 1.95% and 2.00% respectively, which were 10BP, 20BP, 25BP and 25BP lower than before, which was in line with the decline of state-owned banks.
In fact, this will be the third time that major commercial banks have adjusted deposit rates in 2023, and this adjustment is only more than three months after the last adjustment. On September 1 this year, major state-owned banks and joint-stock banks simultaneously lowered the listed interest rates on deposits, and the interest rates of 1-year, 2-year, 3-year and 5-year were reduced by 10BP, 20BP, 25BP and 25BP respectively.
The reporter of Nandu Bay Finance Society visited a number of offline bank outlets in Guangzhou and learned that the RMB deposit interest rates of offline bank outlets of many state-owned banks have been adjusted simultaneously. "In the past two days, there were quite a few people who came to handle the deposit business, and they all rushed to deposit when they heard the news that the interest rate was about to be lowered. There are obviously fewer people coming today. A staff member of a Guangzhou branch of the Industrial and Commercial Bank of China told a reporter from Nandu Bay Finance Society.
A staff member of a Guangzhou branch of China Merchants Bank told reporters that the outlet will officially adjust the RMB deposit interest rate from 12 noon on December 22.
After the interest rate was adjusted, the reporter calculated the account and took 100,000 yuan to save it for 3 years, if the interest rate drops from 2.2% to 1.95%, the cumulative interest due after the interest rate is lowered will be reduced by 750 yuan.
Pressure on interest margins in the banking sector remains the main reason
It is worth noting that on June 8 and September 1 this year, state-owned banks have adjusted their RMB deposit interest rates twice. This is the third time that a state-owned bank has lowered the listed interest rate of RMB deposits this year, just over three months after the last adjustment.
The reporter noted that since the beginning of this year, large state-owned banks have adjusted the RMB deposit interest rates twice in June and September, and the three-year and five-year fixed deposit interest rates have dropped by 40 basis points, and have successively led to the reduction of deposit interest rates of small and medium-sized banks. In response to the reduction of deposit interest rates, the pressure on interest rate spreads in the banking sector is still the main reason.
Chen Xing, chief macro analyst of Caitong Securities, believes that the main reason for the reduction in deposit rates is the contraction of banks' profit margins. On the one hand, in the context of the continuous decline in financing costs, the net interest margin of commercial banks tends to narrow, and the pressure on the liability side of banks is still large; on the other hand, since the fourth quarter, the fiscal policy has continued to strengthen and stabilize growth, and with the concentrated issuance of special refinancing bonds, commercial banks have also cooperated by reducing costs and lengthening the cycle, resulting in a decline in income on the asset side.
"The Central Economic Work Conference called for 'promoting a steady and moderate reduction in the cost of comprehensive social financing'. Dong Ximiao, chief researcher of Zhaolian, said that in this context, banks will still reduce costs on the capital side, and it is more likely that deposit interest rates will fall.
As to whether there is still room for the deposit interest rate to be lowered, Guo Yuwei, deputy general manager of the macro market department of Industrial Research Company, said at the media salon of the first "Wealth Management Festival" of the Guangzhou Branch of Industrial Bank that the current reduction of the deposit interest rate is still a general trend, and it is expected that there is a high probability of a reduction before the first quarter of next year.
"The central bank has recently emphasized many times that commercial banks need to maintain reasonable profits and net interest margins to maintain sound operations and prevent financial risks, which is also conducive to enhancing the sustainability of commercial banks to support the real economy. Therefore, it is expected that the regulatory authorities will further promote the banking financial institutions to reduce the cost of the liability side. Guo Yuwei pointed out.
It is predicted that there will still be a need to cut interest rates and reserve requirements in 2024
Dong Ximiao, chief researcher of Zhaolian, pointed out that since the beginning of this year, commercial banks have better supported the sustained economic rebound and taken the initiative to take a variety of measures to increase fee reductions and concessions to the real economy. At the same time, due to the lack of effective financing needs of enterprises and residents, some banks have attracted more customers by reducing loan interest rates. In addition, the interest rate of the first home loan in stock has been reduced, reducing the interest income of banks by nearly 200 billion yuan per year. Under the effect of a variety of factors, the net interest margin of banks has narrowed significantly since the beginning of this year, and the growth rate of operating income and profit has declined.
This is also reflected in the official figures. According to data released by the State Administration of Financial Regulation, in the third quarter of 2023, the net interest margin of commercial banks was 1.73%, down 0.21 percentage points from 1.94% in the same period last year. "In order to maintain the basic stability of interest margins and reasonable profit growth, and enhance the sustainability of serving the real economy and the soundness of high-quality development, it has become an inevitable choice for banks to reduce the cost of debt by lowering deposit interest rates. Dong Ximiao said in an interview with a reporter from Nandu Bay Finance Society.
Liang Fengjie, an analyst at Zheshang Securities, also pointed out in an interview with the media that bank interest margins continue to be under pressure, which is not conducive to the sustainability of banks serving the real economy, so it is necessary to reduce the cost of bank liabilities to hedge.
"On the whole, due to the impact of fixed-term deposits, the decline in the cost of bank liabilities is lower than the decline in loans, resulting in a continuous narrowing of net interest margins and increased operating pressure. Xue Hongyan, vice president of Xingtu Financial Research Institute, told the reporter of Nandu Bay Finance Society that the reduction of deposit interest rates by major banks may be the prelude to a new round of policy interest rate cuts, or it may simply reduce the cost of debt to stabilize the level of net interest margin.
In Dong Ximiao's view, it is expected that in the next step, other joint-stock banks and small and medium-sized banks will follow up to adjust deposit interest rates. However, due to different banks' deposit pricing strategies and asset-liability management, there may be certain differences in the timing, rhythm and magnitude of deposit interest rate adjustments.
Xue Hongyan told the reporter of Nandu Bay Finance Society that from the perspective of stable growth, there is still a need to cut interest rates and reserve requirements in 2024, so there is a high probability that the deposit rate will continue to fall. In the medium term, deposit rates are expected to stabilize as the domestic economy stabilizes and loose monetary policy returns to prudence.
Expert opinion
Falling interest rates may help boost consumption, but it is difficult to directly drive conversion
In Dong Ximiao's view, the decline in deposit interest rates will reduce the interest on deposits of enterprises and residents, or to a certain extent, it will promote enterprises and residents to expand investment and consumption, which will help boost consumption and expand domestic demand.
However, Xue Hongyan also pointed out that the current consumer confidence is still at a low position, the willingness to hedge is high, and deposits are more of a wealth hedging option for investors, and it is difficult to directly drive deposits to investment or consumption by lowering the deposit interest rate. From the perspective of promoting consumption, the key is to stabilize employment, stabilize income expectations, and increase residents' willingness to consume, so as to better drive the transformation of deposits into consumption.
Dong Ximiao also added that the current effective financing needs of enterprises and residents are insufficient, confidence and expectations are weak, and risk appetite is low. Therefore, to speed up the implementation of the deployment of the Central Economic Work Conference, fiscal policy and monetary policy should be more proactive, take the initiative to continue to help business entities to solve difficulties and the steady recovery of the real economy, stabilize residents' employment, increase residents' income, promote the healthy and stable development of the real estate market, and fundamentally boost the willingness and ability of enterprises and residents to invest and consume.
"The central bank should continue to cut the reserve requirement ratio and policy rate to provide banks with more low-cost funds in the medium to long term. In the long run, it is also necessary to further improve the social security system with full coverage, better meet the urgent needs of residents in terms of pension, medical treatment, education, etc., promote common prosperity for all people, reduce residents' worries and reduce their willingness to save precautionarily. Dong Ximiao told the reporter of Nandu Bay Finance Agency.
interview
Some banks have raised or maintained interest rates
Under the downward wave of bank deposit interest rates, some banks have recently taken the initiative to raise interest rates. According to online clues and interviews, the reporter of Nandu Bay Finance Society collected and sorted out the changes in deposit interest rates of 32 small and medium-sized banks since the fourth quarter, of which 5 banks chose to raise the interest rates of some deposit products against the trend. According to the reporter's statistics, five banks have recently raised interest rates, two of which are located in Henan.
On December 12, Huaibin Rural Commercial Bank announced that it would raise the interest rate on the lump sum deposit and lump sum time deposit for newly opened individuals in stages from now on. If the initial deposit amount is less than 10,000 yuan, the original interest rate will be implemented, and if the initial deposit amount is greater than or equal to 10,000 yuan, the interest rate after the increase will be implemented. Specifically, the interest rates on 3-month, half-year, 1-year, 2-year and 3-year fixed deposits were raised from 1.40%, 1.65%, 1.80%, 2.00% and 2.35% to 1.50%, 1.70%, 1.95%, 2.15% and 2.40%. Among them, the 1-year and 2-year tenors of individual lump sum deposits and withdrawals were both raised by 15 basis points.
On December 19, a staff member of the Zhujiang Rural Bank in Heshan, Guangdong Province, confirmed to reporters that the bank had adjusted the one-year execution interest rate for lump sum deposits and withdrawals from 2.1 percent to 2.25 percent since November 1, raising it by 15 basis points, and the Guangxi Xing'an Minxing Village and Township Bank had raised the interest rates on two "county-exclusive time deposits" of six months and one year by 30 basis points and 15 basis points respectively since November 21.
On November 30, the National Bank of Guilin announced that the bank will raise the execution rate of deposit products from December 1, of which the interest rates of the 6-month and 2-year products will be adjusted to 2.05% and 2.75% respectively, while the 3-year and 5-year execution rates will be adjusted to 3.3%.
Although bank deposit interest rates have continued to adjust since the beginning of this year, the current deposit product interest rate has exceeded 3%.
The reporter learned that from the end of the year to March next year, the interest rate of the three-year fixed deposit of Haikou Sunan Village Bank was 3.45% and the five-year rate was 3.65%. At present, the maximum interest rate of Shandong Weifang Bank's 3-year and 5-year fixed deposit of 50,000 yuan can reach 3.2%, and the interest rate of 3-year and five-year deposit of 10,000 yuan can also reach 3.1%.
Industry insiders: interest rates will continue to fall in the coming period or the norm
Not every bank can afford an increase in deposit rates. The above-mentioned Heshan Zhujiang Rural Bank raised its deposit rate to 2.25% in early November and then lowered it back to 2.1% in its latest announcement on December 20.
In fact, in the eyes of industry insiders, the current rise in deposit rates is only temporary, and the continuous decline in interest rates is the norm.
"Other banks are also reducing (deposit interest rates), and the one-year term of our bank has not changed for the time being," a staff member of Guangzhou Huadu Chouzhou Village Bank told reporters that the bank's one-year interest rate on the whole deposit and withdrawal is still at the level of 2.15%, but the three-year and five-year interest rates have dropped to 3.0% and 2.8% respectively on November 7.
The staff member told reporters that in response to the call of the state to further stimulate the development of the real economy, the current bank has launched a wealth of loan concessions, which to a certain extent makes the deposit interest rate not too high.
In this regard, Dong Ximiao, chief researcher of Zhaolian, also said that the Central Economic Work Conference required "promoting the steady and moderate decline of comprehensive social financing costs". In this context, banks will still reduce costs on the capital side, and it is more likely that the deposit rate will fall. Small and medium-sized banks should rationally expand their deposit business according to their own assets and liabilities, and should not only maintain an appropriate increase in deposits, but also keep the cost of liabilities within a reasonable range.
Regarding the trend of deposit interest rates in the future, Xue Hongyan, vice president of Xingtu Financial Research Institute, also said frankly: "It is a high probability event that banks will continue to reduce deposit interest rates in 2024. ”
He said that the level of interest rate spreads in the banking industry will remain under pressure next year, on the one hand, the repricing effect of existing loans at the beginning of the year, and on the other hand, in the context of the Federal Reserve entering the interest rate cut cycle, the mainland will most likely still cut the reserve requirement ratio and interest rates. In order to stabilize the level of interest rate spreads, banks have an incentive to cut deposit rates more sharply.
Written by: Nandu Bay Finance Society Xi Reporter Liu Changyuan Wu Hongsen Reporter Wang Wenyan Luo Manyu