Recently, the news that China Merchants Bank removed the 3-year and 5-year large-value certificates of deposit has cast another layer of frost on the already declining deposit market.
Certificates of deposit, a deposit product with a long maturity and high returns, have been highly sought after by investors in recent years. "Which one has the highest interest rate on large-amount certificates of deposit?", "Strategies for buying large-amount certificates of deposit", and "The difference between large-amount certificates of deposit and fixed deposits" are all hot topics on social media. And because the interest rates of the same bank are different in different regions, buying large certificates of deposit across provinces was also quite popular last year.
In the view of some financial people, China Merchants Bank has relatively well controlled the cost of liabilities in the industry, and the removal of large-amount certificates of deposit from the shelves at this time reflects that the entire banking industry is facing a certain degree of pressure on the difference between deposits and loans. On the other hand, as far as the current policies to stimulate consumption are concerned, residents are excessively "defensive savings" and a large amount of funds are heading to the medium and long-term deposits of banks, which is not conducive to social and economic development and the recovery of the consumer market. The high interest rate on medium- and long-term certificates of deposit of banks is also contrary to the current monetary policy.
They said that there are many ways to ensure income investment, and there is no need to be completely limited to large certificates of deposit.
01. Suspend some large-value certificates of deposit
At present, on the large-value certificate of deposit page of the China Merchants Bank App, the maximum maturity of the large-amount certificate of deposit is only 2 years, with a minimum deposit of 200,000 yuan and an interest rate of 2.15%. The 3-year product can only be found in the transfer area, with a maximum interest rate of 2.29%, but it is not the same as the 2.90% interest rate in 2023.
▲ (Screenshot of China Merchants Bank App)
The wealth manager of China Merchants Bank told "City Boundary", "These two types of large-value certificates of deposit (3-year and 5-year) are indeed out of quota in April and are sold out." It should be again in May. The implication is that CMB's removal is only temporary, not permanent.
Despite this, this bit of wind and grass of China Merchants Bank still caused a huge reaction in the financial circle, and they reposted and commented, "Even China Merchants Bank can't hold on, and other banks should follow suit." Be prepared to accept the reality of low interest rates in the future. ”
Ordinary people are more concerned about the compression of their deposit interest in the future, and one investor sighed, "This is the meaning of asking the deposit out of the bank!"
After hearing the news that the large-value certificate of deposit was taken off the shelves, Xiao Yi was secretly happy. In March last year, when she had just entered the palace of marriage, she wanted to reserve some funds for her married life, and spent 300,000 yuan to buy a three-year large-amount certificate of deposit with an interest rate of 3.55% in a Sino-foreign joint venture bank, and she could collect 31,950 yuan in interest after maturity. At that time, she watched the news and felt that interest rates would fall again in the future. Sure enough, when I open it now, the interest rate of the same product has dropped to 2.8%, and many banks can't grab the 3-year product at all.
On April 17, the "City Boundary" sorted out the situation of 10 banks, including 3 state-owned banks, 4 joint-stock banks, and 3 city commercial banks. It was concluded that only the ICBC shelf showed a 5-year large-denomination certificate of deposit product with an interest rate of 2.4%, but clicking to buy showed that it was sold out.
Among the state-owned banks, China Construction Bank, Agricultural Bank of China, and Industrial and Commercial Bank of China still have three-year large-denomination certificates of deposit products with an interest rate of 2.35%. Among the non-state-owned banks, the interest rates of the three-year large-denomination certificates of deposit products of Minsheng Bank, China Everbright Bank, Shanghai Pudong Development Bank and Bank of Shanghai ranged from 2.55% to 2.70%.
Some banks have imposed restrictions on large-value certificates of deposit, such as the 1-year high-value certificate of deposit of Shanghai Pudong Development Bank, which is a product exclusive to new customers, and the 18-month high-net-worth product of Bank of Shanghai, which has an interest rate of 2.25%, but requires a minimum deposit of 1 million, and the interest rates of 2-year and 3-year are 2.45% and 2.7% respectively, which is also a minimum deposit of 1 million. The 3-year term is only available for users in Hangzhou and Beijing.
In addition, Bank of Communications is the most exaggerated, the current APP shows that there are no large-value certificates of deposit for sale, only transferred large-amount certificates of deposit.
Compared with last year, the overall level of interest rates on large certificates of deposit has declined significantly. For example, the 1-year interest rate was 2% last year, and now it has dropped to 1.8%~2.05%; the 3-year interest rate has been adjusted even more, from 2.9% last year to 2.35%, which is getting farther and farther away from the 3% node. Last year, joint-stock banks were able to grab large certificates of deposit with interest rates of more than 3%, but this year they collectively disappeared, such as the three-year interest rate of China Everbright Bank, which was 3.15% last year, and dropped to 2.6% this year, a decrease of 17%.
Some Internet banks or local banks, due to their weaker influence and ability to absorb deposits than medium and large banks, are still launching large-denomination certificate of deposit products with higher interest rates than those of the above-mentioned banks.
For example, WeBank's 2-year large-denomination certificates of deposit interest rate is 2.5%, Xinwang Bank's 2-year large-denomination certificates of deposit interest rate reaches 2.70%, and Tianfu Bank's 2-year large-denomination certificates of deposit are sold out instantly on April 17.
In terms of rural commercial banks, Shanxi Wenxi Rural Commercial Bank vigorously promoted large-amount certificates of deposit with a three-year interest rate of 2.95 percent; Jiangsu Taicang Rural Commercial Bank had an interest rate of 2.7 percent on two-year large-amount certificates of deposit, which required an appointment to purchase at the counter of the outlets, and the subscription period ended on April 30; Shandong Wenshang Rural Commercial Bank's three-year interest rate on large-amount certificates of deposit was 3.0 percent, and the bank shouted that "the quota is limited, first come, first served!" Shandong Weifang Bank issued a document saying, "A good place to make deposits, Weifang Bank is selling 1 million negotiable certificates of deposit with a minimum deposit of 2.6 percent."
"In the past 3-4 years, we have witnessed the interest rate on large certificates of deposit go from breaking 4% to breaking 3.5% and then breaking 3%. "A financial manager suggested that the way that can be thought of now is to brush more large-amount certificates of deposit transfer areas of various banks, and it is possible to find large-amount certificates of deposit with slightly higher interest rates.
02. What signal is released?
It stands to reason that the minimum deposit of large-amount certificates of deposit is 200,000, which has an extremely excellent ability to collect deposits, and attracts high-net-worth individuals with relatively wealthy funds in their hands, and is also very considerable in the mining of user value. Why are the major banks, led by China Merchants Bank, tightening the issuance of large-value certificates of deposit?
Xue Hongyan, vice president of Xingtu Financial Research Institute, told the "City Boundary" analysis that from the experience of the past two years, commercial banks have mainly hedged interest rate pressure by reducing deposit interest rates more sharply, striving to increase the proportion of demand deposits, and continuously optimizing the loan structure. "The recent suspension of the issuance of large-denomination certificates of deposit by banks is another attempt to control the cost of debt and stabilize net interest margins. ”
According to data disclosed by the State Administration of Financial Supervision and Administration, in the fourth quarter of 2023, the net interest margin of commercial banks was 1.69%, down 4 bps quarter-on-quarter (1BP is 0.01%) and down 22bp year-on-year. Among them, China Merchants Bank's net interest margin decreased from 2.59% at the end of 2019 to 2.15% in 2023. The key reason for this is that deposits run faster than loans.
According to the annual report, the total deposits of China Merchants Bank in 2023 will be about 8.16 trillion yuan, an increase of 8.22% from the end of the previous year, and the fast-growing balance of retail + corporate time deposits will be as high as 3.68 trillion yuan, doubling from three years ago. Many residents and enterprises cannot find good investment products, so they can only deposit large amounts of money in banks. This constitutes a sweet annoyance for China Merchants Bank.
At the end of 2023, CMB's total loans increased by 7.56% from the end of the previous year to 6.51 trillion yuan, compared with a year-on-year increase of 7.84% at the end of the third quarter of 2023. Among them, at the end of 2023, the balance of real estate loans of China Merchants Bank was 290.742 billion yuan, a decrease of 42.973 billion yuan from the end of the previous year. As a result, the interest income of CMB's loans in 2023 will be 268.2 billion yuan, a year-on-year increase of only 0.99%, while the deposit interest expense will be as high as 128.8 billion yuan, a year-on-year increase of 21.71%.
In view of the fact that the deposit side is the liability of the bank, the fixed and long-term deposit will push up the cost of the bank. However, if the willingness of households and enterprises to borrow does not keep pace with the growth rate of debt, the net interest margin of banks will be tightened even more. It is no wonder that Wang Liang, president of China Merchants Bank, put forward the requirement of "living a tight and strict life" at the 2023 annual results conference.
In fact, CMB's deposit cost ratio (the ratio of total costs and expenses to the average balance of deposits) is quite low in the queue of joint-stock banks, at 1.62% in 2023. In the same period, Ping An Bank, Industrial Bank and Minsheng Bank were 2.2%, 2.24% and 2.31% respectively, and China Everbright Bank was as high as 2.32%. Now China Merchants Bank has taken the lead in reducing large-amount certificates of deposit and reducing deposit costs, indicating that the banking industry is indeed ushering in a difficult time.
Colin, a chartered financial analyst and investment director of a private equity fund, told the "market" that from the perspective of banks, there is an urgent need to reduce the cost of funds, especially the cost of long-term funds, and the second is to compress deposit funds in the short term.
"In terms of the overall environment, the reduction of long-term high-interest deposits will also help stimulate consumption. At present, residents are excessively 'defensive savings', and a large amount of funds are going to the medium and long-term deposits of banks, which is not conducive to social and economic development and the recovery of the consumer market. ”
It is worth noting that according to the central bank's March financial statistics report, RMB deposits increased by 11.24 trillion yuan in the first quarter, of which household deposits increased by 8.56 trillion yuan. Based on the mainland's population of about 1.4 billion, in the first quarter of 2024, each person will add about 6,114 yuan to the bank on average.
In the eyes of bank employees, the banking market has completely changed, "In the past, there was a fine for not enough savings, but last month, the loan did not meet the standard. Please stop sending money to the bank and borrow more money from the bank. ”
Author | Chen Chang
Edit | Han Zhongqiang
Operations | Liu Shan