Recently, the financial reports of various listed banks have been announced, and when studying the financial reports of various banks, a phenomenon has aroused our attention, that is, the mortgage loans of the six major banks have shrunk by more than 500 billion, but at the same time, the proportion of fixed deposits of many large banks has exceeded 50 percent.
1. The mortgage loans of major banks shrank by 500 billion yuan, and fixed deposits accounted for more than half of them
According to the 21st Century Business Herald, the six major banks have successively released annual reports, and it can be seen from the financial report data that although the six major banks will have a positive growth rate in public real estate loans in 2023, the overall growth rate will slow down;
Judging from the statements of the senior executives at the performance meeting of the six major banks, they all emphasized the need to increase the clearance of non-performing products and prevent and resolve real estate risks. In the annual reports of the six major banks, CCB is the only bank that provides detailed information on the real estate business, and it mainly supports the reasonable financing needs of the real estate industry from the perspectives of mortgage loans, public real estate loans, and housing leasing.
According to the financial report, as of the end of 2023, the total balance of corporate real estate loans (domestic caliber) of the six major banks was 4.09 trillion yuan, an increase of about 253.5 billion yuan from the end of the previous year, with a growth rate of about 6.6%. In 2022, the increment and growth rate of this indicator will be 328.2 billion yuan and 9.34%, respectively, and the growth rate will show a slowdown trend.
In stark contrast, the deposit business of banks is affected by factors such as the marketization of deposit interest rates, and the trend of fixed-term deposits of commercial banks is becoming more and more obvious. The four major banks are the ballast of the mainland's banking industry, and the deposit and loan business can basically reflect the overall development of the industry.
According to the RMB credit balance sheet of depository financial institutions of the central bank, as of the end of 2023, the balance of domestic deposits of depository financial institutions was 283,181.458 billion yuan, of which the balance of time and other deposits was 151,715.908 billion yuan, accounting for 53.58%, and the balance of domestic deposits of the four major banks in the same period was 110,441.346 billion yuan, and the balance of time deposits was 40,227.802 billion yuan, accounting for 36.42% (note: the caliber is slightly different from the former).
According to the annual financial report released a few days ago, as of the end of 2023, the time deposits of the four major banks accounted for more than 50% (note: slightly different from the above-mentioned central bank), which is also the first time in recent years that the proportion of time deposits of the four major banks has exceeded 50%, Industrial and Commercial Bank of China, Agricultural Bank of China, China Construction Bank, and Bank of China are 57.7%, 54.1%, 53.61%, and 53.3% respectively, of which 2023 is the fastest year for the proportion of time deposits.
According to the financial report, as of the end of 2023, the deposit balances of Industrial and Commercial Bank of China, Agricultural Bank of China, China Construction Bank, and Bank of China were 33,521.174 billion yuan, 28,898.468 billion yuan, 27,654.011 billion yuan, and 22,907.050 billion yuan, respectively, with a year-on-year growth rate of 12.2%, 15.0%, 10.52%, and 13.39% respectively.
2. What's wrong with everyone?
In recent years, with the continuous development and changes of the domestic financial market, the scale of mortgage loans of large commercial banks has shrunk significantly, and the proportion of fixed deposits has gradually exceeded 50%. This phenomenon is not accidental, but how can we analyze and judge it?
First of all, the performance of commercial banks is actually directly inseparable from the mentality of consumers. As the cornerstone of the financial system, the ups and downs of banks' performance are closely linked to changes in consumer confidence and demand. The economic environment is a key factor influencing consumer confidence and demand, and consumers' future expectations directly determine their savings and investment decisions.
Let's be clear, consumer expectations are not static. When the economic environment changes, whether for the better or for the worse, consumers' psychological expectations will adjust accordingly. This adjustment is often based on the perception of future economic uncertainty. If consumers feel that the future economic outlook is uncertain and uncertain, then their spending and investment behavior will be affected.
Specifically, consumers are likely to become more cautious when they anticipate increased economic uncertainty in the future. This cautious mindset is reflected in their savings and investment decisions, which are more inclined to save more and spend less and invest. After all, in an uncertain economic environment, keeping enough cash reserves to cover possible risks is the preferred strategy for many people, and this is the basis of all our analysis.
Second, the shrinkage of mortgage loans is a portrayal of bank loans. The business basis of commercial banks is clearly defined in three categories, that is, the familiar "deposit, loan, foreign exchange" three categories of business, and this mortgage loan business is more obvious, which is a very distinct representative of the loan business, and the impact of the adjustment of the real estate market on the scale of mortgage loans is significant. When the market enters a period of adjustment, housing prices fluctuate, and consumers' willingness to buy a house is often suppressed. This increased wait-and-see attitude has led potential homebuyers to postpone or cancel their home purchase plans, which in turn has affected the issuance of bank mortgage loans.
In the process of deep adjustment of the real estate market, the decline in housing prices directly affects the value expectation of real estate. Consumers take into account the risks posed by falling home prices when evaluating the return on investment in real estate. As a result, even for those who were originally intending to buy a home, they may choose to wait for the bottom of the market to arrive in anticipation of being able to purchase a property at a lower price, thereby reducing the cost of buying a home.
In addition, the correction in the real estate market is usually accompanied by a tightening of credit policy. In order to control the overheating of the real estate market and prevent financial risks, local regulations will increase the down payment ratio of housing loans, limit the amount of housing loans, or adjust the level of interest rates. The adjustment of these policies will increase the threshold for home buyers to buy a house, further reducing the demand for home purchases in the market.
What's more, it is also related to the independent choice of banks, as the main providers of mortgage loans, their business performance is directly affected by the state of the real estate market. During the downturn in the real estate market, banks are exposed to increased risk of bad debts and are more cautious in approving loans. As a result, banks may proactively reduce the amount of mortgage loans issued to reduce the risk of non-performing loans.
It can be said that the shrinkage of mortgage loans is the result of a comprehensive choice between consumers, regulators, and banks based on self-interest considerations.
Third, the increase in the proportion of fixed deposits is more indicative of consumer expectations. Let's take a look at the changes in time deposits, and the increase in the current proportion of time deposits deeply reflects the expectations and mentality of current consumers. Against the backdrop of increasing downward pressure on the global economy, competitive pressure on companies, and increasing difficulty in making money, consumers' consumption expectations are insufficient, and market confidence is weak. In this environment, people are more inclined to adopt a conservative financial strategy to deal with possible economic risks. Saving more money has become a common coping strategy. By increasing the proportion of fixed deposits, consumers can obtain a certain amount of interest income while ensuring the safety of their funds. This phenomenon reflects the increased motivation of residents to save precautionarily, fearing possible economic fluctuations and personal financial risks, thereby increasing the level of emergency reserves.
At the same time, because gold, as a long-established safe-haven asset, usually does not shrink significantly in value due to the economic problems of individual countries or regions, and has good global liquidity and is not affected by the risks of the single monetary system, the investment attractiveness of gold will increase correspondingly when market confidence is low. Consumers and investors tend to allocate a portion of their capital to safe-haven assets such as gold, in the hope of maintaining or even increasing their value during financial market turmoil, diversifying their portfolios and reducing overall risk.
Fourth, what should commercial banks do? In the current scenario, the decline in the volume of mortgage loans and the increase in the proportion of time deposits reflect the weakness of market confidence. Consumers are more likely to hold cash or make safer fixed deposits rather than invest in property or other risky assets due to concerns about future economic uncertainties, which has led to weaker demand for home purchases and lower demand for mortgage loans.
For banks, the spread between deposits and loans is one of their main sources of profit. The deposit-loan spread is the difference between the interest paid by a bank to a depositor on a deposit and the interest charged to the borrower on the loan. In the case of an increase in deposits and a decrease in loans, especially high-yield loans such as mortgage loans, banks have more low-cost funds, but it is difficult to effectively convert them into high-yield loans, which will lead to narrowing of interest rate spreads, which in turn will affect the overall profit level of banks.
Therefore, in order to boost banking profits and widen deposit and loan spreads, banks need to focus not only on how to adjust their lending products and services to meet changes in market demand, but also on the overall background of the improvement of the macroeconomic environment and the recovery of consumer confidence. For example, by cooperating with government policies, we will promote the rebuilding of market confidence, optimize the loan process and conditions, launch more attractive mortgage products, and provide high-quality financial services, so as to stimulate the willingness of potential customers to buy houses and drive the recovery of mortgage loan business. At the same time, it can also seek to develop other types of loan business and non-interest income growth points to ensure sound operation in a complex economic environment. Only when confidence is truly restored will a more comprehensive recovery in the banking sector be possible.