The five major banks, small and medium-sized banks, have seen the "scissors difference" in interest rates!? Decipher the logic behind the three major anomalies

Text: Wang Kaiyu Ed

"ICBC, Agricultural Bank of China, Bank of China, CCB and other major banks have lowered the listed interest rate of RMB deposits since December 22, and the listed interest rates of 3-year and 5-year fixed deposits have dropped the most, at 25BP. ”

On the winter solstice on December 22, ICBC, Agricultural Bank of China, Bank of China, China Construction Bank and other major banks have lowered the listed interest rates of RMB deposits from today, and the listed interest rates of 3-year and 5-year fixed deposits have dropped the most, at 25BP.

At the same time, some small and medium-sized banks, such as the Huaibin Rural Commercial Bank in Henan, launched a "surprise attack" to attract deposits, and the interest rate on fixed deposits rose against the trend, and a wider and wider "gap" appeared in the interest rate of bank deposits.

Behind the "gap" in deposit interest rates at both ends of the spectrum, the "Governor's Quick Look" observes three "anomalies" in banks, deposit returns and scale: the "war drums are silent" during the critical period of making a good start to the deposit, the income of saving for five years is not as good as saving for three years, and the lower the interest rate, the more customers love to save.

Large banks lowered and small banks raised, and deposit interest rates are now "divided"

On December 22, a number of banks, including Industrial and Commercial Bank of China, China Construction Bank, Bank of China, Agricultural Bank of China, Postal Savings Bank and other banks, lowered their deposit interest rates again, and the adjusted three-year time deposit interest rate (whole deposit and withdrawal, the same below) was 1.95%, down 25 basis points from the previous one, entering the "one era"; the five-year time deposit interest rate was 2%, down 25 basis points; the one-year time deposit interest rate was 1.45%, down 10 basis points; and the two-year time deposit interest rate was 1.65% , a 20 basis point reduction, a number of banks will also follow up the adjustment, this is the beginning of September this year after the national commercial banks cut the deposit interest rate, the first time in three months.

Shortly before that, on December 12, Henan Huaibin Rural Commercial Bank announced on the official WeChat platform that from now on, the interest rate on fixed deposits will be adjusted for newly opened individuals with a minimum deposit amount of more than 10,000 yuan, and small and medium-sized banks such as Gushi Rural Commercial Bank, Guilin National Village Bank, Guangdong Heshan Zhujiang Village Bank, and Guangxi Xing'an Minxing Village Bank have also adopted an upward adjustment strategy. In terms of the magnitude of the increase, most of them are concentrated in 5 to 15 bps (basis points).

This move is undoubtedly "bucking the trend" at the moment. With the pull of "raising and lowering" on both sides, bank deposit interest rates have gradually shown a gap.

Three "abnormal" phenomena: the "war drum is silent" during the critical period of collecting deposits, saving for five years is not as good as saving for three years, and the lower the interest rate, the more customers love to save

The "Governor's Quick Facts" found that in addition to the completely different "tactics" adopted by small and medium-sized banks and large banks for the adjustment of deposit interest rates, there are also three "abnormal" phenomena in the entire industry.

First of all, the "drums of war" of various banks in the critical period of collecting deposits are silent. According to the accounting year and business rhythm of Chinese business, the market is often full of funds at the end of the year and the beginning of the year, which is the best time for banks to sprint to a good start. According to the logic of previous years, in order to enhance the competitiveness of various institutions in collecting deposits, the increase in interest rates is in line with public expectations. However, a number of financial experts said that due to the impact of the macroeconomic downturn and the weakening of investment stability, most customers choose low-risk regular savings, and the desire for social loans has weakened, resulting in too many bank deposits that cannot be released, and the pressure on interest rate spreads is increasing day by day, and interest rates are forced to be lowered. As a result, the "year-end war" that many people expected to raise interest rates to attract customers did not appear.

As a result, only a few local small and medium-sized banks have expanded their savings in this way. However, Anhui Xin'an Bank, which was previously rumored to have a 6-month term interest rate of up to 6% products, also denied it, saying that the bank did not have deposit products and related incentives with such high interest rates. On the other hand, large banks have never focused on collecting deposits, as can be seen from the reduction of deposit rates.

The second is that the interest rate on three-year fixed deposits is higher than that of five-year deposits caused by interest rate inversion. In the tide of interest rate cuts, the interest rate on long-term deposits has fallen most seriously, and there has even been an "inversion" phenomenon in which the three-year fixed interest is higher than the five-year fixed interest. For example, the maximum annual interest rate of a three-year lump sum deposit and withdrawal of a lump sum deposit of the China Construction Bank is 2.6%, but the maximum annual interest rate of a five-year deposit is only 2.25%, and the maximum interest rate of the two-year deposit and withdrawal of a lump sum RMB deposit on the BOCOM App is 2.35%, but the maximum interest rate of the three-year deposit is only 2.2%.

Obviously, as the overall interest rate trend in the future is still not optimistic, the bank's capital guaranteed income channel continues to narrow, long-term deposits have lost the "favor" of the bank at the moment, and it can be seen from the general view of the large certificates of deposit on sale in most national banks: the 5-year varieties have all been taken off the shelves, and even the 3-year large-amount certificates of deposit of some banks have disappeared.

Third, with the continuous decline of deposit interest rates, the balance of domestic deposits has risen instead of falling. While it is theoretically possible that lower deposit rates will make them less attractive to savers, the opposite is true. Due to the current low return on investment, customers prefer low-risk products such as time deposits and bank wealth management. According to the information disclosed by the central bank on December 13, at the end of November, the balance of RMB deposits was 284.18 trillion yuan, an increase of 10.2% year-on-year, and in the first 11 months, RMB deposits increased by 25.65 trillion yuan, an increase of 130.1 billion yuan year-on-year.

However, for many banks that "don't worry about running out of money, but only worry about money not being able to release it", it is difficult to say whether the continuous increase in deposits is happiness or trouble. On the one hand, continuing to increase the amount of deposits may in turn increase the pressure on banks, leading to a "vicious circle" of continued downward cuts in long-term interest rates. On the other hand, the decline in deposit and loan interest rates will also help promote the steady decline in the comprehensive financing cost of the real economy, providing an opportunity to promote economic recovery.

Both sides of the divide: Interest rate hikes may not be sustainable, and interest rate cuts can build up momentum for economic development

For small and medium-sized banks, their own financing channels are limited, and their customer base and social credibility are far less than those of large and medium-sized banks. Under the general trend of lowering interest rates, it is a clever plan to increase the scale of deposits by going the opposite way and launching a "year-end surprise attack" to raise interest rates and attract savings.

However, Xue Hongyan, vice president of Xingtu Financial Research Institute, believes that behind the high-profile collection of savings, small and medium-sized banks are still facing a trade-off between "scale, pricing, and income", and like the industry, small banks are also facing pressure from narrowing interest rate spreads and repricing in 2024. It can be judged from this that the "chasm" created by the contrarian increase in interest rates is likely to be short-lived.

In contrast, the trend of lower bank deposit rates may not change in the short term. CICC said that at the beginning of next year, it would not rule out the possibility of a 10bp-20bp LPR cut, and Zhou Maohua, a macro researcher at the financial market department of Everbright Bank, also said that it would not rule out that the bank deposit interest rate would continue to be lowered in the future.

However, the reduction of interest rates by large and medium-sized banks may be a kind of "retreat into advance" to accumulate momentum for subsequent economic development. The latest research report of Minsheng Securities pointed out that the big bank cut the deposit interest rate this time or boost the net interest margin by 3bp and boost the revenue growth rate by 1.2 percentage points. The reduction was carried out before the "good start", and the impact on the bank's debt cost management in 2024 (especially in the first half of the year) may be more significant. At the same time, it also opens up room for LPR interest rate cuts in the first half of 2024, and is expected to boost economic expectations, which is conducive to the repair of bank valuations, which is also consistent with the long-term interests of investors.