Medium- and long-term large-denomination certificates of deposit are hard to find, and banks continue to reduce the cost of debt

China Net Finance, April 25 With the gradual decline in net interest margin, many banks have removed large-amount certificate of deposit products with a maturity of more than three years. Recently, China.com financial reporters checked a number of bank APPs and found that five-year large-amount certificates of deposit are nowhere to be seen, and three-year large-amount certificates of deposit are also relatively rare.

Industry experts said that some banks have adjusted their plans for the issuance of large-amount certificates of deposit, time deposits and other products, including reducing the scale of issuance and removing some products, mainly to reduce deposit interest rates and reduce debt costs. Overall, commercial banks will continue to cut deposit rates in 2024 to further reduce the cost of funds and ease the pressure of narrowing interest rate spreads.

Five-year certificates of deposit are hard to find

Due to the characteristics of high returns, transferability, and early withdrawal, large-denomination certificates of deposit have always been favored by depositors. With the gradual decline in net interest margin, many banks have adjusted the issuance of medium and long-term large-denomination certificates of deposit, and five-year large-denomination certificates of deposit are difficult to find, and large-denomination certificates of deposit with a three-year maturity and below can still be seen, but the interest rate is the same as or not much different from the interest rate of fixed deposits with a lower starting point.

The reporter checked the APP of many banks such as Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China, China Merchants Bank, Shanghai Pudong Development Bank, Industrial Bank and other banks and found that there were no five-year large-amount certificates of deposit. According to the China Merchants Bank APP, large-value certificates of deposit with a minimum deposit of 200,000 yuan are only available for two years or less. "At present, there is no quota for three-year and five-year large-value certificates of deposit, but it remains to be seen whether there is a quota for sale in the future. A customer manager of China Merchants Bank told reporters.

Recently, the reporter visited a number of bank outlets in Beijing and learned that the interest rate of five-year time deposits is lower than that of three-year time deposits, and some banks need to go to the counter for five-year time deposits. The account manager of a branch of the Industrial Bank said: "The five-year fixed deposit of our bank does not distinguish between large and large amounts, and it cannot be bought by mobile banking, so it must be handled at the counter. ”

In terms of the large-denomination certificate of deposit products sold by various banks, the interest rate advantage is not obvious, and some banks only issue them to new customers. The reporter noticed that the IB APP shows that the interest rate of the three-year large-amount certificate of deposit with a minimum deposit of 200,000 yuan and the special deposit interest rate with a minimum deposit of 50 yuan are both 2.60%, and the interest rate of the three-month, six-month and one-year large-amount certificates of deposit is 5 basis points higher than the interest rate of the characteristic deposit of the corresponding period, and the interest rate difference is not obvious. In addition, according to the Shanghai Pudong Development Bank APP, the bank's three three-month, six-month, and one-year large-value certificates of deposit with a minimum deposit of 200,000 yuan are specially marked as "exclusive for new customers".

At present, the APP of the Industrial Bank shows that the one-year and three-year certificates of deposit are sold out, and the bank's account manager said that a part of the quota will be released every day, but it is basically difficult to grab it. "Because interest rates have been falling, many older people are keen on fixed deposits, and they will still choose large certificates of deposit. The account manager of a branch of the Industrial and Commercial Bank of China said.

Some small and medium-sized banks continue to be enthusiastic about issuance

"Large-denomination certificates of deposit, a blockbuster is coming!" "A good place to deposit, negotiable large-denomination certificates of deposit are on sale"...... At a time when the large state-owned banks and joint-stock banks were "tightening" large-value certificates of deposit, some urban commercial banks and rural commercial banks were still enthusiastic and were still actively promoting the sale of large-value certificates of deposit, but they could hardly find products with a maturity of more than three years.

Taking Weifang Bank as an example, the bank's large-denomination certificates of deposit are being sold for two-year and below products, of which the interest rates for two-year large-denomination certificates of deposit of 200,000, 500,000 and 1 million are 2.45%, 2.50% and 2.60% respectively, and the issuance period is from April 16, 2024 to April 40, 2024.

Due to different factors such as market competition, customer positioning, and liability structure, different banks have different rhythms and magnitudes of adjusting deposit interest rates. Compared with large state-owned banks and joint-stock banks, the interest rate of large-value certificates of deposit products offered by local small and medium-sized banks is relatively high, and the interest rate of large-amount certificates of deposit of some rural commercial banks exceeds 3.0%.

The reporter noted that the fourth phase of Cangwu Rural Commercial Bank's 2024 large-amount certificates of deposit showed that the interest rates on three-month, six-month, one-year, two-year, and three-year large-amount certificates of deposit of 200,000 were 1.70%, 1.90%, 2.20%, 2.45%, and 3.25%, respectively, and the issuance time was from April 1, 2024 to April 30, 2024.

"Generally speaking, the recent changes in the large-denomination certificate of deposit market are the result of commercial banks' market-oriented choices in the face of changes in the business environment and according to their own conditions. Lou Feipeng, a researcher at the Postal Savings Bank, said that the advantages of small and medium-sized banks on the debt side are not obvious, and the absorption of deposits is still under pressure.

Zhou Maohua, a macro researcher at the financial market department of Everbright Bank, said that the above problems involve the pricing of deposit products by different banks. "At present, the proportion of fixed deposit liabilities in the banking system is still significantly higher than the average level. However, it is not excluded that small and medium-sized banks in some regions will moderately increase large-value certificates of deposit products to better attract customers and enhance customer stickiness. Zhou Maohua said.

It is intended to drive down the cost of debt

At present, the banking industry is facing the pressure of declining net interest margin, and many banks have removed large-amount certificate of deposit products with a maturity of more than three years, mainly to reduce the cost of debt and promote the stability of net interest margin. According to the 2023 Main Regulatory Indicators of Commercial Banks (Quarterly) released by the State Administration of Financial Supervision and Administration, as of the end of 2023, the net interest margin of important indicators of commercial banks fell to 1.69%, falling below the 1.7% mark for the first time.

Dong Ximiao, chief researcher of Zhaolian Financial, said that the main reason for the decline in net interest margin is that banks have increased their efforts to reduce fees and profits to the real economy, and the LPR has fallen many times. In 2024, banks' net interest margins are likely to decline as the comprehensive financing costs of society are steadily reduced.

"In this case, lowering the deposit interest rate and reducing the cost of debt have become the common choice of commercial banks. Some banks have adjusted their plans for the issuance of large-denomination certificates of deposit, time deposits and other products, including reducing the scale of issuance and removing some products from the shelves, mainly to reduce deposit interest rates and reduce the cost of liabilities. Dong Ximiao said.

It is worth noting that a number of senior executives of major state-owned banks said at the 2023 annual results conference that they would control the cost of debt. "This year, we have stepped up the assessment of first-level branches, strengthened the control of high-interest deposits with a maturity of more than three years and interbank liabilities with relatively high costs, and reduced the discount scale with relatively low returns on the asset side. At the same time, we will continue to build an enterprise-level capital cycle and capture low-cost settlement funds through digital and ecological methods. Sheng Liurong, chief financial officer of China Construction Bank, said.

"Spreads are still under a lot of pressure this year. Zhang Yi, deputy governor of the Bank of China, said that on the liability side, it is necessary to continue to promote the reduction of debt costs, increase the intensity of customer acquisition in scenarios, and promote the rising proportion of low-cost settlement funds through business opportunities such as payroll, quick payment, and treasury. "At the same time, we will reduce the pressure on high-cost deposits this year very largely, including agreement deposits, structured deposits, and large-amount certificates of deposit with a maturity of more than three years. Zhang Yi said.

Dong Ximiao said that banks should abandon the scale complex and speed complex, not pursue simple scale growth and market share, not only to maintain the steady growth of the deposit business, but also to control the cost of liabilities within a reasonable range. In the future, in addition to lowering deposit interest rates, banks should reduce interest subsidies and fees other than interest on deposits, so as to further reduce the hidden costs of deposits.

(Editor in charge: Wang Qingyu)