While national banks are tightening medium and long-term large-denomination certificates of deposit, some local urban and rural commercial banks are still making efforts. On April 16, a reporter from Beijing Business Daily noticed that recently, Weifang Bank, Wenxi Rural Commercial Bank, Taicang Rural Commercial Bank, Fukang Rural Commercial Bank and many other banks have different terms of large-amount certificates of deposit for sale or are about to be sold, compared with national banks, the overall interest rate has a certain advantage, and the interest rate of individual banks is close to 3% for 3-year large-amount certificates of deposit.
In the opinion of analysts, the current phenomenon of "deposit moving" still exists, and small and medium-sized banks are under greater pressure to collect deposits due to geographical restrictions, and in the context of the reduction of the quota of large-value certificates of deposit of national banks, small and medium-sized banks issue large-amount certificates of deposit in order to obtain a higher share of deposits. However, considering that the downward trend of deposit interest rates remains unchanged, it is expected that the issuance of large-denomination certificates of deposit may gradually slow down in the future, and the overall decline in interest rates is still the general trend.
Local banks issued "against the trend".
"A good place to make deposits, 2.6% negotiable certificates of deposit are on sale!" "Notice! This issue of large-value certificates of deposit will be on sale soon"...... At a time when the quota and interest rate of large-value certificates of deposit of some large banks and joint-stock banks are "tightening", many local urban and rural commercial banks are still vigorously promoting large-value certificates of deposit for sale or pre-sale.
On April 16, a reporter from Beijing Business Daily combed and found that many local small and medium-sized banks such as Weifang Bank, Wenxi Rural Commercial Bank, Taicang Rural Commercial Bank, and Fukang Rural Commercial Bank have large certificates of deposit of different terms for sale or are about to be sold.
Image source: Yitu.com
For example, Fukang Rural Commercial Bank has sold personal large-amount certificates of deposit since April 16, with a minimum deposit amount of 200,000 yuan, and the annualized interest rates for 3 months, 6 months, and 1 year are 1.7%, 1.9%, and 2% respectively, and declares that "limited-time limited sales are available on a first-come, first-served basis". On April 16, a reporter from Beijing Business Daily learned from a branch of Fukang Rural Commercial Bank that the longest term of the bank's large-amount certificates of deposit is 1 year, and the interest rate is higher than that of 1.9% of the fixed deposits of the same period, and there are no 2-year or 3-year large-amount certificates of deposit for sale.
Taicang Rural Commercial Bank has opened the appointment of individual large-amount certificates of deposit, and launched a new customer-exclusive large-amount certificate of deposit product for new customers or customers with funds transferred from outside the bank, with a product term of 2 years, an annualized interest rate of 2.7%, and a minimum purchase amount of 200,000 yuan.
Taicang Rural Commercial Bank a branch of the staff introduced, the current large-amount certificate of deposit subscription channel is limited to the branch counter, April 30 before the customer can go to the bank outlets to scan the code to make an appointment or through the small program code provided by the branch staff to make an appointment, fill in the name, ID number, appointment amount and other information, review before the deposit, April 30 before 17:00 customers need to transfer enough funds in the corresponding bank card, May 7 formal subscription.
It is understood that a large-amount certificate of deposit is a large-amount deposit certificate issued by a bank to an individual or institution, with a term ranging from 3 months to 5 years, and the initial deposit amount of an individual is usually 200,000 yuan. It is favored by depositors due to stable income and high interest rates, but with the multiple rounds of deposit interest rate reductions since 2022, the interest rate on large certificates of deposit has also fallen again and again.
Compared with national banks, the interest rate of large-denomination certificate of deposit products offered by local small and medium-sized banks is relatively high. In the case of Wenxi Rural Commercial Bank, the interest rate on the bank's recently sold three-year large-denomination certificates of deposit is 2.95%, while the interest rate on large-denomination certificates of deposit of state-owned banks of the same maturity is generally 2.35%, and the interest rate of joint-stock banks is 2.5% or 2.6%.
Ming Ming, chief economist of CITIC Securities, said that the current phenomenon of "deposit moving" still exists, and for local small and medium-sized banks, the degree of geographical and security is not as good as that of national banks, and the pressure on deposits will be greater. Against the backdrop of the reduction in the quota of certificates of deposit of national banks, small and medium-sized banks have issued large certificates of deposit to enhance the attractiveness of depositors, thereby encouraging depositors to save with the bank.
Quotas and interest rates are expected to continue to decline
Due to the cost of debt, a number of national banks have tightened the issuance quota of large-denomination certificates of deposit (CDs) with a maturity of 3-year and 5-year medium and long-term CDs. On April 16, a reporter from Beijing Business Daily inquired about a number of national bank apps and found that some national bank apps no longer exist in 5-year certificates of deposit, and 3-year certificates of deposit are becoming more and more rare.
The medium- and long-term certificates of deposit (CDs) offered by national banks no longer have the interest rate advantage of the past, and the interest rates are the same as those of time deposits of the same maturity or special deposit products with relatively low minimum purchase amounts. For example, the interest rate of the Industrial and Commercial Bank of China and the China Construction Bank of China for a minimum deposit of 200,000 yuan for a period of 3 years is 2.35%, which is consistent with the highest interest rate of the fixed deposit of the same period. The interest rate of the 3-year large-amount certificates of deposit of 200,000 yuan is 2.6%, which is consistent with the bank's ceremonial certificates of deposit with a minimum deposit of 50 yuan and the exclusive deposits of customers with a minimum deposit of 5,000 yuan.
Reducing the quota and interest rate of medium- and long-term large-denomination certificates of deposit is a means for banks to control the cost of medium- and long-term deposits. Although deposit interest rates will be lowered several times in 2023, the rigidity of deposit costs of many banks is still relatively significant, and the pressure on banks' net interest margins is still severe in the context of declining asset yields.
At the 2023 annual results conference of Bank of China, China Construction Bank, Postal Savings Bank and other banks, the management revealed that it will increase the proportion of demand deposits in 2024 and continue to control medium and long-term deposits with a maturity of more than 3 years. Among them, Zhang Yi, deputy governor of the Bank of China, revealed that the bank will increase the pressure on high-cost deposits such as large-amount certificates of deposit with a maturity of more than 3 years in 2024.
Xue Hongyan, vice president of Xingtu Financial Research Institute, believes that due to a variety of reasons, the net interest margin of the banking industry is still under pressure to narrow this year, and commercial banks mainly hedge the pressure of interest margin by reducing deposit interest rates more sharply, striving to increase the proportion of demand deposits, and continuously optimizing the loan structure. Recently, some banks have imposed a large certificate of deposit limit, which is another attempt to control the cost of debt and stabilize the net interest margin. However, depending on the specific development status of different banks, the development status of the region is quite different, and the pricing pressure on the asset side is different, and individual banks are not in a hurry to reduce high-interest liabilities based on their own strategic demands, and obtain a higher share of deposits through large-amount certificates of deposit, although it is not the mainstream of the industry, but it is also a normal phenomenon.
Looking forward to the subsequent issuance trend and investment suggestions of large-denomination certificates of deposit, Ming Ming said that considering that the downward trend of deposit interest rates remains unchanged, it is expected that the issuance of large-denomination certificates of deposit may gradually slow down in the future, and the overall interest rate will still decline. However, the deposit rate of small and medium-sized banks is expected to fall less than that of national banks. For depositors, on the one hand, they should grasp the appropriate deposit products in combination with their liquidity needs, and on the other hand, they can also invest part of their funds in low-risk asset management products such as bank wealth management.
"In the short term, whether it is the need to stabilize domestic growth and real estate, or the world's major central banks are about to enter a cycle of interest rate cuts, it indicates that the mainland will continue to cut interest rates. In order to stabilize the level of bank interest margins, it is inevitable to reduce the deposit interest rate by a larger margin, and the deposit interest rate will most likely continue to decline in the future, and the interest rate on the issuance of large-amount certificates of deposit will gradually fall along with the deposit interest rate. Xue Hongyan pointed out that in the face of the general trend of downward deposit interest rates, depositors should take the initiative to change their thinking and achieve a balance between risk and return through the diversified allocation of wealth. At this stage, considering that in the context of the acceleration of anti-globalization and the rise of global uncertainties, gold is still expected to continue its outstanding performance, and it is a good choice to hold a certain position in gold for long-term investment. In addition, the current valuation of the A-share market is at a historically low level, and the superimposed economic fundamentals are expected to usher in an inflection point, and the medium- and long-term prospects of A-shares are good, with higher cost performance and investment value than foreign markets. From the perspective of medium and long-term investment, equity funds are also a good investment variety.
Beijing Business Daily reporter Li Haiyan