Bank wealth management ushered in the "year-end bonus" season, and the annualized rate of return of some products in the past month was close to 8%
Editorial Department of this journal丨Wu Haishan
Over the years, banks have launched some "year-end bonus exclusive" products at the end of the year and the beginning of the year to win this abnormal fund. Generally speaking, the relative yield of this type of product will be higher. In the current market environment where the interest rate of three-year time deposit is only 2.6%, the performance benchmark of such products can reach 3.5%~4%.
At the end of the year and the beginning of the year, banks usually launch some wealth management products with the words "year-end bonus", which are sought after by investors because their returns will be higher than those of ordinary wealth management products. For example, as of January 24, since 2024, the annualized return of some wealth management products is close to 8%, which is significantly higher than the performance benchmark and much higher than the deposit interest rate.
Market institutions expect that with the recovery of the net value of wealth management products and the reduction of deposit interest rates, the scale of wealth management products will continue to recover in 2024 and is expected to return to more than 30 trillion yuan. It is worth noting that in the current allocation of bank wealth management products, the proportion of fixed income assets is still on the rise.
Bank wealth management ushered in the "year-end bonus" season
The annualized return of some products is close to 8%
Over the years, banks have launched some "year-end bonus exclusive" products at the end of the year and the beginning of the year to win this abnormal fund. Generally speaking, the relative yield of this type of product will be higher.
This year is no exception, starting from the end of 2023, various wealth management products with the words "year-end bonus" and "salary" abound. In the current market environment where the three-year fixed deposit interest rate is only 2.6%, the performance benchmark of this type of product can reach 3.5%~4% in 1~2 years.
For example, the performance benchmark given by Ping An Wealth Management's new 119th one-year closure (exclusive year-end bonus) is an annualized return of 3.5%~4%; The performance benchmark given by Ningxin Fixed Income Closed-end Wealth Management 1338 (Year-end Bonus Exclusive)-A of Ningbo Wealth Management is 3.7%, and the investment period is 2 years.
Most of the banks we interviewed advised investors to buy products with a relatively longer investment horizon, citing "interest rates that will continue to fall in the future".
Yang Rong, chief analyst of China Securities Construction Investment Bank, also told this magazine: "In the allocation of bank wealth management assets, cash and bank deposits account for 25%, and the current decline in the income of bank wealth management products is still lagging behind the reduction of deposit interest rates, and the yield of wealth management products will still decline in the future." ”
The fundraising period for the above-mentioned year-end bonus products is from January 19 to 25. As of January 24, the investable amount of the product was only shown at 128 yuan, while the upper limit of the product was 5 billion yuan.
Judging from the current performance, the annualized rate of return of most wealth management products in the latest month is much better than the performance benchmark given (see Table 1). For example, it can be seen in the APP of Minsheng Bank on January 24 that the Minsheng Li Fortune Bamboo Fixed Income Stable Two-Year Closed No. 9 Wealth Management Product has an annualized return of 7.9551% since its inception (from December 14, 2023 to January 22, 2024), and the performance benchmark given by the product is 3.8%~4%. Another Minsheng Li Fortune Bamboo Fixed Income Stable One and a Half Year Closed No. 5 Wealth Management Product has an annualized rate of return of 7.3793% from December 7, 2023 to January 22, 2024.
Both of these products are fixed income products with a risk level of 2. Their performance could not have been linked to the recent strength in the bond market. Bank wealth management products are fixed-income products, which means that the proportion of such products invested in deposits, bonds and other assets is not less than 80%.
Adjust the allocation of bank wealth management
The proportion of fixed income products has increased year by year
It is worth noting that in 2024, among the "year-end bonus exclusive" products, fixed income products account for a significantly higher proportion. Looking back at the wealth management products in the past two years, the proportion of fixed-income wealth management products has increased year by year.
According to data from China Merchants Securities, the proportion of fixed-income wealth management products (including cash management wealth management) has reached 95.15% in the first half of 2023, and its proportion has increased by 7 percentage points in the past two years, while the proportion of hybrid wealth management products has decreased by 7 percentage points. (See Table 2)
According to the data, as of January 21, 2024, the scale of fixed income products was 16.85 trillion yuan, and the scale of cash management products was 8.65 trillion yuan, totaling 25.5 trillion yuan.
Looking at it further, the proportion of fixed income products will still increase in 2024, while the proportion of cash management products will continue to decline. According to the statistics of Debang Securities, 641 new fixed-income products were issued on January 15~21, 2024, an increase of 59 from the previous month, and the average performance was 3.31%; 7 new cash management products were issued, a decrease of 7 from the previous month.
According to the statistics of China Merchants Securities, in the first half of January, the semi-monthly annualized returns of fixed income, fixed income + and holding period fixed income wealth management were 4.5%, 3.4% and 2.0% respectively. Contrary to the performance of fixed income products, the average year-to-date average returns of hybrid wealth management products and equity wealth management products are negative. And the net failure rate is also very high.
Yang Rong said: "With the decline in deposit interest rates, bank wealth management will adjust and optimize the asset allocation structure, gradually reduce the proportion of cash and bank deposits, and appropriately increase the proportion of high-yield assets. At the same time, in order to ensure the stable growth of wealth management scale, wealth management products will still increase the proportion of assets with high valuation safety boundaries, ensure the stability of wealth management net value, and maintain the wealth management net failure rate at a low level. ”
In this environment, bonds are a better choice. At the same time, the bond market has recovered further as yields have fallen. At present, the interest rates of 10-year treasury bonds and CDB active bonds are 2.50% and 2.72%, respectively
At the beginning of each year, wealth management is often an important allocation force for increasing holdings of credit bonds and interest rate bonds. According to the statistics of Minsheng Securities, in the first quarter of 2022~2023, the net purchase scale of wealth management on interest rate bonds will be 183.4 billion yuan and 46 billion yuan respectively; The increase in credit bonds was 70.9 billion yuan and 227.8 billion yuan respectively. For the whole year of 2023, bank wealth management increased its holdings of credit bonds by 923.1 billion yuan, which was the second largest purchase of credit bonds. However, bank wealth management mainly increases its holdings of varieties with a maturity of 1 year and below. This is because the bank's wealth management asset allocation is biased towards defensiveness, preferring short-duration varieties, focusing on liquidity management, and matching with the liability side.
The advantages of bank wealth management products are highlighted
The scale is expected to exceed 30 trillion in 2024
However, despite the higher yield of "year-end bonus exclusive" products, from the perspective of scale, the first quarter is not the peak season for the "expansion" of wealth management products. According to the new weekly data of Puyi Standard, the new issuance of bank wealth management decreased by 77.923 billion yuan to 8.65 trillion yuan on January 15~21. As of January 21, the scale of bank wealth management was about 26.08 trillion yuan, and by the end of 2023, the data exceeded 27 trillion yuan.
Historically, however, this has been common. Liao Zhiming, chief analyst of the banking industry at China Merchants Securities, believes that the seasonal phenomenon behind this is related to the rhythm of bank wealth management and deposits, "most banks attach importance to the 'good start', and the so-called 'good start' is mainly to complete the substantial growth of deposits and loans in the first quarter, and complete 40% or more of the annual plan." In the past, banks tended to guide customers to redeem their wealth management products to flush their deposits in the first quarter and at the end of the year, which made it difficult for the wealth management scale to increase year-on-year in the first quarter and December of the previous year. ”
The second and third quarters of each year are the peak seasons for the growth of bank wealth management scale. According to the statistics of China Merchants Securities, during the period of 2019~2022, the average quarterly increase in wealth management scale in the second and third quarters reached 1.3 trillion yuan. This is especially evident in 2023, at the end of 2022, after the "net breaking tide" triggered by the volatility of the bond market, bank wealth management fell into a "redemption tide", and the scale of bank wealth management once fell to 25 trillion yuan under negative feedback, which was surpassed by public funds. Later, with the recovery in the third and fourth quarters, by the end of 2023, the scale of bank wealth management will rebound to 27.2 trillion yuan, but it is still lower than the 30 trillion yuan before the "redemption wave".
Judging from the current expectations of institutions for the trend of bank wealth management scale, they are still relatively optimistic, and it is expected that the scale of bank wealth management products is expected to reach about 30 trillion yuan by the end of 2024.
Minsheng Securities said in the research report that in the context of the decline in bank deposit interest rates, the substitution effect of wealth management product deposits is gradually emerging, or bringing new opportunities for scale growth.
In 2023, major state-owned banks announced three cuts in deposit rates in June, September and December. As of the end of 2023, the listed interest rates for three-month, six-month, one-year, two-year, three-year, and five-year fixed deposits are 1.15%, 1.35%, 1.46%, 1.65%, 1.95%, and 2.0%, respectively, a decrease of 10bp, 10bp, 20bp, 50bp, 65bp, and 65bp from the beginning of the year.
The yield of wealth management products is significantly higher than the deposit interest rate. According to the statistics of Debang Securities, from January 15 to 21, 2024, the performance benchmark of newly issued wealth management products of 3 months ~ 6 months (inclusive) is 3.09%; The performance benchmark of 6 months ~ 1 year (inclusive) is 3.32%; The performance benchmark of 1 year (exclusive) ~ 3 years (inclusive) is 3.62%.
In addition, China Merchants Securities compared the 7-day annualized rate of return of cash management wealth management products and money market funds. As of January 15, 2024, the seven-day annualized rate of return of public money market funds is 2.01%, and the center of return of cash management wealth management products is 2.18%. The yield of cash management wealth management is about 17 points higher than that of public money market funds.
Liao Zhiming also believes that due to the reduction of deposit interest rates and keeping them low, the scale of wealth management is expected to maintain steady growth, with a high point of more than 30 trillion yuan. The scale of bank wealth management exceeded this figure in November 2022, when it was close to 31.5 trillion yuan.
Liao Zhiming believes that bank wealth management still has great potential in the future, and the logic he uses is to compare the scale of bank wealth management with bank personal deposits. According to the data, in 2016, the scale of bank wealth management was 23.1 trillion yuan, and the scale of personal deposits was 59.8 trillion yuan, and the ratio of wealth management scale to personal deposits reached 38.6%. As of the end of June 2023, the scale of bank wealth management products is 25 trillion yuan, while personal deposits are as high as 132 trillion yuan, and the ratio of wealth management scale to personal deposit scale is only 19.2%. ”
(This article has been published in the "Securities Market Weekly" on January 27, and the views in the article only represent the personal guests and do not represent the position of this magazine.) The products mentioned in the article are only for example analysis and do not make a buy recommendation. ）