Some banks are "out of stock" of three-year large-value certificates of deposit, and have turned to insurance and wealth management products

"There is no quota for three-year large-denomination certificates of deposit for the time being. Liu Yu (pseudonym), an account manager at a city commercial bank in Guangzhou, recently replied to customers the most with this sentence. The three-year large-denomination certificates of deposit of his bank have not been "new" for two months, and the interest rate of the latest period is much worse than that of the same period last year, and the difference between it and ordinary time deposits is only about 5BP. The old scene of rushing to grab large certificates of deposit no longer exists.

In fact, reducing the scale of large-denomination certificates of deposit has become the "standard" in the strategy of many banks recently. In the course of a recent visit to banks, this reporter noticed that in the deposit "shelves" of many banks, there have been changes in the price and structure of large-value certificates of deposit. On the one hand, most banks have gone through several rounds of reductions in large-denomination certificates of deposit, and the interest rate difference between them and ordinary fixed deposits has gradually narrowed, and the advantage no longer exists; on the other hand, some banks have taken the initiative to adjust the term structure of large-denomination certificates of deposit, and the three-year large-denomination certificates of deposit have been "out of stock" or have been discontinued.

In this context, many bank relationship managers have begun to retweet savings insurance, low-risk wealth management and other products.

Some banks' three-year large-denomination certificates of deposit are "out of stock"

Starting in 2023, deposit interest rates will continue to fall, and the aura of interest rates on large certificates of deposit, which banks used to be "gold absorbers", no longer exists. Taking the three-year large-denomination certificate of deposit product with a minimum deposit of 200,000 yuan as an example, according to the APP data and the information provided by the account manager, the interest rate of the latest large-denomination certificate of deposit (21 issues in 2024) of CCB is 2.35%, a decrease of about 50BP from the interest rate of 2.85% half a year ago (August 2023), and the annual interest rate of the latest large-denomination certificate of deposit of Bank of Guangzhou is 2.7%, a decrease of about 55BP from the interest rate of 3.25% half a year ago (August 2023).

Among the three-year large-value certificates of deposit products of more than 10 banks counted by this reporter, except for a few private banks, which can rise to more than 3%, most of the banks are basically below 3%.

In addition, the "interest rate differential" between large certificates of deposit and fixed deposits of some banks no longer exists. Taking China Construction Bank as an example, the interest rates of the bank's two-year and three-year lump sum deposit products are 1.9% and 2.35% respectively, which are consistent with the latest interest rates on large-denomination certificates of deposit. Bank of China's online channels also show that the current interest rates of two-year and three-year lump sum deposit and withdrawal products (minimum deposit of 5,000 yuan) are 1.9% and 2.35% respectively, which are consistent with the latest interest rates on large-amount certificates of deposit.

Under the superposition of various factors, the interest of bank managers and customers in large-value certificates of deposit seems to be no longer high, and the scene of "hard to find an order" in the past no longer exists.

It is worth noting that while lowering interest rates, many banks are choosing to take the initiative to adjust their product structure, and medium- and long-term large-value certificates of deposit are "out of stock".

The reporter saw on the China Merchants Bank APP that at present, in the hot-selling product area of large-value certificates of deposit, three-year large-amount certificates of deposit have "disappeared". The interest rates on one-year and two-year certificates of deposit are 2% and 2.15% respectively. The director of a branch of China Merchants Bank in Guangdong told reporters that there is no quota for three-year large-amount certificates of deposit products.

Bank of China's online channels also show that the current two-year and three-year certificates of deposit show "insufficient quota". The three-year deposit interest rate of Bank of Guangzhou's large-denomination certificates of deposit is 2.7%, and there is currently only a remaining quota in the two products marked with the words "high-quality issuance exclusive" and "new customer exclusive".

Switching to savings insurance products?

Under the superposition of multiple factors such as the decline in interest rates and the "shortage of goods" of some products, the "halo" of large-value certificates of deposit seems to have dimmed. Many bank relationship managers have started to retweet savings insurance products.

"Recently, the yield on wealth management and deposits is low, and it is recommended that customers allocate a part of their funds to insurance. A customer manager of a joint-stock bank told reporters that in a low-interest rate environment, it is easier for such products to lock in long-term yields.

The account manager of a state-owned bank also recommended a savings insurance. According to the demo table she provided, the product is a five-year single delivery, with a guaranteed yield of 1.9%, and an estimated annual yield of 3.5%~3.8% after dividends.

In addition, low-risk wealth management such as cash management is also a hot recommendation by banks. "Short-term funds can be placed in this kind of cash management and financial management, and long-term funds can be considered to be allocated in insurance. This is an alternative against the backdrop of falling deposit rates. The account manager of the above-mentioned state-owned bank told reporters.

Some banks have begun to adjust KPI indicators, the above-mentioned joint-stock bank told reporters that the current branch of the requirements for deposit indicators has been relatively reduced, while the sales pressure on insurance, wealth management and other products began to rise.

However, it is worth noting that there are still essential differences between insurance, wealth management and bank deposits, and there is no commitment to "capital preservation". An industry insider pointed out that most savings insurance products require a long investment period, and the cash value in previous years is low, and if the policy is surrendered early, it may cause a loss of principal. Since the transformation of wealth management products, they have mainly followed market fluctuations, and the yield has not been stable.

The reason behind it

In the view of many industry insiders, the adjustment of the product structure of large-denomination certificates of deposit by banks is mainly based on the control of debt costs.

According to data released by the State Administration of Financial Supervision and Administration, as of the end of 2023, the net interest margin of mainland commercial banks has fallen to 1.69%, falling below the 1.7% mark for the first time, a decrease of 0.04 percentage points from the first three quarters of 2023. However, the yield of asset-side loans is still in a downward channel, and further efforts are still needed to control debt costs under the pressure of interest margins.

An industry insider believes that one of the difficulties in debt cost control lies in high-interest time deposit products such as large-value certificates of deposit. Starting in 2023, the deposit structure of commercial banks will continue to change, and low-interest demand deposits will continue to be converted into high-interest time deposits. Judging from the 2023 RMB Credit Balance Sheet of Financial Institutions disclosed by the People's Bank of China, the balance and proportion of fixed deposits in the household sector and non-financial enterprises are on the rise. The share of time deposits in the household sector increased from 68.1% to 71.5%, while that of non-financial corporations increased from 65.9% to 68.4%.

"It is expected that banks will take the initiative to adjust their structure, shorten the duration of deposits, and reduce the proportion of high-priced deposits. Liu Chengxiang, an analyst at Kaiyuan Securities, pointed out that since 2023, small and medium-sized banks have continued to reduce the scale of structural deposits, in addition, the interest rate spread between large-amount certificates of deposit and time deposits of the same maturity has gradually narrowed, and banks' preference for high-priced deposits has been declining.

In recent bank financial reports and performance conferences, many banks have also emphasized that they will strengthen the control of deposit costs. For example, China Merchants Bank pointed out in its latest financial report that in order to maintain the relative stability of the net interest yield, the asset side has done a good job in loan allocation, while the debt side has focused on promoting the growth of low-cost core deposits. Li Bin, vice president and secretary of the board of directors of Minsheng Bank, said at the results conference that the overall cost of deposits is relatively high, and efforts should be made to broaden low-cost and stable sources of funds.

Zhang Yi, deputy governor of the Bank of China, pointed out that the pressure on high-cost deposit business will be very strong this year. We have set reasonable growth targets for products such as agreement deposits, structured deposits, and large-amount certificates of deposit with a maturity of more than three years, and will appropriately control the proportion of business in this area.

(This article is from Yicai)