China Merchants Bank Stops Selling Large-Amount Certificates of Deposit? Large Banks Tighten, Small and Medium-sized Banks Launch New Ones, Three-Year Interest Rates Up to About 3%

Source of this article: Times Finance Author: Zhang Xinying

Source: Picture Worm Creative

Banks' large-denomination certificates of deposit, which were once in short supply, are diverging.

Recently, the news that "China Merchants Bank has stopped issuing large-value certificates of deposit with a maturity of more than 3 years" has attracted market attention. Times Finance has noticed that although some state-owned banks and joint-stock banks still have medium and long-term large-value certificates of deposit for sale, many of them have run out of quotas.

However, some small and medium-sized banks that are under pressure to collect deposits are "bucking the trend and making new ones".

On April 16, Hunan Ningxiang Rural Commercial Bank announced on its official public account that the bank would sell large-amount certificates of deposit with a three-year deposit period of 200,000 yuan from April 17, with an annual interest rate of 2.65%.

In addition to Hunan Ningxiang Rural Commercial Bank, some small and medium-sized banks in many places are still issuing new large-value certificate of deposit products, mainly urban rural commercial banks and private banks.

For depositors, large-denomination certificates of deposit (CDs) remain attractive.

"On the last day of the day, I caught up with the interest rate on large certificates of deposit, and tomorrow it will drop to 2.7%. On April 16, Ms. Lin from Sichuan caught the "last train" before a local city commercial bank cut interest rates and deposited a three-year, 400,000 yuan large fixed deposit at an interest rate of 3.2%. "Now many banks have no deposits for 3~5 years, and there are only a handful of them who want to find high interest rates. Ms. Lin said.

There are still 5-year certificates of deposit with an annual interest rate of more than 3%

Recently, the news that "China Merchants Bank will no longer issue new 3-year and 5-year large-value certificates of deposit" has attracted market attention. China Merchants Bank responded to the media that it is not to stop issuing large-value certificates of deposit, but the 3-year and 5-year quotas are limited, and the current supply limit is limited.

On April 16, Times Finance consulted a customer manager of China Merchants Bank, who said, "Now there are no 3-year and 5-year deposits for the time being." However, the manager also introduced that at present, there is a quota for the 3-year, 1,000 yuan minimum deposit "enjoy fixed deposit" deposit product of China Merchants Bank, with an annualized interest rate of up to 2.6%, and a limit of 50,000 yuan can be reserved every month, and it can be purchased after making an appointment.

In terms of state-owned banks, the ICBC bank APP shows that the bank's annual interest rate on 3-year large-amount certificates of deposit is 2.35%, of which the minimum deposit limit of 3 million is sufficient, and the minimum deposit limit of 200,000 yuan has been sold out; The Agricultural Bank of China also announced that it would issue two three-year large-amount certificates of deposit with an annual interest rate of 2.35% on April 1 ~ April 30, with a starting amount of 200,000 yuan and 1 million yuan respectively.

According to the China Construction Bank APP, the bank's large-amount certificate of deposit products currently on sale include 6 months, 1 year, 2 years and 3 years, all of which have a minimum deposit of 200,000 yuan, of which the 3-year interest rate is 2.35%, and the quota is not insufficient.

At the same time, some stock banks are pushing for 3-year large-amount certificates of deposit. On April 15, Bohai Bank announced on its official public account that the annual interest rates of the bank's three-year large-amount certificates of deposit with a minimum deposit of 200,000 yuan and a minimum deposit of 500,000 yuan were 2.65% and 2.70% respectively. On the same day, the bank announced the adjustment of the interest rate of RMB personal call deposit products, and the execution rate of "one-day call deposit+" was adjusted to 0.8%.

While the big banks are tightening the large-amount certificates of deposit, many local small and medium-sized banks are "bucking the trend and making new ones".

According to Times Finance, some banks in many places are still issuing new large-value certificate of deposit products, mainly urban and rural commercial banks and private banks.

According to the announcement of Hunan Ningxiang Rural Commercial Bank, the bank has been selling large-amount certificates of deposit with a deposit period of three years and a minimum deposit of 200,000 yuan since April 17, with an annual interest rate of 2.65%. On the same day, Times Finance called a branch of Ningxiang Rural Commercial Bank, and the bank's staff said, "Now only large-amount certificates of deposit can reach an interest rate of 2.65%, and other ordinary (deposits) are only 2.45% at most. ”

On April 12, Jiangsu Wuxi Xishang Bank announced on its official public account that the bank's 1-year, 3-year, and 5-year large-amount certificates of deposit are on sale, with annual interest rates of 2.20%, 3%, and 2.90% respectively, of which the 3-year and 5-year interest rates are "inverted". Among the above products, except for the 1-year product, which is not transferable, the other products can be transferred after 90 days, and the interest rate is valid until April 30, 2024.

In addition, according to the Bank of Dongguan disclosed on its official platform on April 7, the bank's initial deposit amount of 200,000 yuan, the annual interest rate of 3-year large-value certificates of deposit reached 3.10%. and "transferable, early withdrawal". However, the bank also said that the above interest rate is a customized product, which can only be purchased by customers who meet the standard within 30 days when funds outside the bank are transferred to meet the standard.

A number of large banks grew their fixed deposits by more than 20% last year

The reduction of the quota of medium and long-term large-denomination certificates of deposit by many large banks is not unrelated to the continuous decline in the overall interest rate spread of the banking industry.

According to the State Administration of Financial Supervision and Administration, as of the fourth quarter of 2023, the net interest margin of mainland commercial banks fell from 1.74% at the end of the first quarter to 1.69% at the end of the fourth quarter, falling below the 1.7% mark for the first time.

However, against the backdrop of several cuts in deposit rates, residents still choose to save. According to data released by the central bank, in the first quarter of 2024, mainland RMB deposits increased by 11.24 trillion yuan, of which household deposits increased by 8.56 trillion yuan.

Reflected in the bank's annual report, it is the continuous rise in the cost of deposits.

According to the annual report, as of the end of 2023, the total deposits 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, an increase of 12.2%, 15.0%, 10.52%, and 13.39% year-on-year.

In terms of interest expense, the Bank of China is under more pressure. In 2023, Bank of China's customer deposit interest expense will be 450.851 billion yuan, a year-on-year increase of 44.54%. The average interest rate on customer deposits reached 2.09%, up 44 basis points from 1.65% in 2022.

In 2023, ICBC's deposit interest expense will be RMB589.688 billion, a year-on-year increase of 22.8%, and the average interest payment rate will increase by 14 basis points to 1.89% from 1.75% in 2022.

In contrast, the average cost rate of deposits absorbed by China Construction Bank and Agricultural Bank of China increased by 4 basis points and 0.8 basis points respectively year-on-year.

The annual report of China Merchants Bank also shows that the interest expense of customer deposits in 2023 will be 128.809 billion yuan, a year-on-year increase of 21.71%.

Residents' willingness to deposit is rising, and the trend of fixed-term deposits is particularly obvious. In 2023, ICBC's fixed deposits increased by RMB4,176.147 billion, up by 27.6%, while demand deposits decreased by RMB617.111 billion, down by 4.4%. In terms of business types, time deposits and demand deposits accounted for 31.3% and 18.1% of ICBC's personal deposits, respectively.

In addition, CCB's demand deposits will also grow by more than 20% in 2023. According to its annual report, in 2023, CCB's domestic fixed deposits will be 14.70 trillion yuan, an increase of 21.25% over the previous year, and the proportion of the bank's domestic deposits has risen to 55.01%.

In terms of joint-stock banks, according to the 2023 annual report of China Merchants Bank, the bank's retail time deposits and retail demand deposits increased by 48.58% and -7.75% year-on-year respectively. The bank said in its annual report that due to the decline in customer risk appetite and the insufficient activation of corporate funds, the demand for customers to invest in time deposit products was high, and the proportion of demand accounts declined.

Recently, many banks have made it clear that they will control medium and long-term deposits and reduce the cost of debt.

Liu Jianjun, president of the Postal Savings Bank, said at the bank's results conference held on April 2 that by strengthening the comprehensive assessment of wealth management and AUM, customers can retain more demand deposits, try to increase the proportion of demand deposits, and carry out certain control over medium and long-term deposits.

ICBC also mentioned in its annual report that the interest payment rate of the bank's domestic RMB deposits has been stable and declining, and the interest rate on newly absorbed time deposits has decreased significantly year-on-year.