#记录我的2024#这些年, with the popularization of new financial products such as money market funds and smart notice deposits, the pursuit of high returns in wealth management has become the consensus of most people. How do we analyze it?
1. The "delisting tide" of smart notice deposits is coming
According to the report of the Financial Associated Press, not long ago, a number of rural commercial banks in Shandong such as Ningjin Rural Commercial Bank, Xiajin Rural Commercial Bank, and Wulian Rural Commercial Bank issued relevant announcements one after another, announcing that they would terminate the automatic rollover notice deposit.
According to incomplete statistics from the Financial Associated Press, more than 20 banks have removed smart notice deposits during the year, and about 11 banks have followed up since May alone. Under the pressure of the continuous narrowing of interest rate spreads, banks continued to reduce high-interest deposits, and a variety of high-interest savings tools such as large-value certificates of deposit, smart notice deposits and manual interest payments were gradually restricted.
In addition to the three banks of Ningjin Rural Commercial Bank, Xiajin Rural Commercial Bank and Wulian Rural Commercial Bank, Liangshan Rural Commercial Bank, Linyi Rural Commercial Bank, Wucheng Rural Commercial Bank, Juxian Rural Commercial Bank and Qingdao Jimo Huimin Village Bank and other banks have also announced the termination of automatic transfer of notice deposits, and Shandong has ushered in a large-scale "removal tide" of intelligent notice deposits.
It is understood that call deposit is a kind of deposit business that does not stipulate the deposit period, and needs to notify the bank in advance when withdrawing, and the withdrawal date and amount can only be withdrawn. On this basis, the intelligent notice deposit omits the links of "customer notice in advance" and "customer notice and timely withdrawal" to achieve automatic rollover.
According to a report by the Shanghai Securities News, as early as May last year, a number of banks, including large state-owned banks and joint-stock banks, had removed smart call deposit products from the shelves, or lowered the upper limit of call deposit interest rates. Looking back, in September 2022, major state-owned banks took the lead in lowering the listed interest rates on deposits, kicking off the prelude to the "interest rate cut" on deposits. So far, the deposit interest rate has gone through four rounds of reductions, usually the large state-owned banks are the first to cut them, and the joint-stock banks and small and medium-sized banks have followed up to adjust the deposit interest rates in "echelon" rotation.
In the first quarter of this year, a number of banks rarely experienced a reduction in deposits. For example, Bank of Xiamen's deposits at the end of the first quarter fell by 9.1% compared with the beginning of the year, mainly due to the decline in the company's certificate of deposit pledge business and high-cost foreign currency deposits. Bank of Tianjin's customer deposits decreased by 0.89% from the beginning of the year, mainly because the bank continued to reduce high-cost deposits, which affected the growth of deposits to a certain extent.
Coincidentally, at a time when deposit interest rates continue to fall, large-amount certificates of deposit are "hard to find", and fixed deposits with an annual interest rate of more than 3% are almost extinct. Recently, Minsheng Bank and China Merchants Bank announced that they would stop selling large-amount certificates of deposit products with a maturity of more than half a year, and small and medium-sized banks have joined the army of deposit "interest rate cuts".
According to Yicai's survey, from the reduction of interest rates on time deposits, call deposits, agreement deposits, and large-amount certificates of deposit, to the inclusion method of insurance asset management deposits, the standardization of "manual interest compensation", and then to the suspension of some long-term large-amount certificates of deposit, the removal of innovative products such as smart notice deposits, and the high-interest varieties of deposits are gradually "disappearing".
2. What should I do if the interest rate on deposits is getting lower and lower?
In the current global economic environment, traditional commercial banks are facing unprecedented challenges, one of which is the continued decline in deposit rates. This trend is not only reflected in the "removal tide" of high-interest products such as smart notice deposits, but also profoundly affects the financial choices and lifestyles of ordinary people.
First of all, with the changes in the global economic environment and the adjustment of the monetary policies of central banks, it has become a common phenomenon that deposit rates are gradually lowering. Deposit and loan spreads are one of the traditional profit models of commercial banks. However, with the continuous decline in interest rates, the spread between deposits and loans has continued to narrow, resulting in serious challenges to the profitability of commercial banks. The net interest margin of commercial banks as of the end of 2023 has fallen to a record low of 1.69%, which is below the level agreed by regulators. Among the 42 listed banks, only Bank of Qingdao will have a wider net interest margin in 2023, while the net interest margin of the remaining 41 listed banks will all narrow, with the largest decline of more than 40 basis points.
Not only profits, but also the decline in net interest margin also reflects the management pressure and challenges faced by commercial banks in the process of operation. Net interest margin is one of the important indicators to measure the profitability and risk level of commercial banks. When net interest margins fall to historically low levels, it means that commercial banks need to manage risks more carefully in the course of operation to ensure sound operation and sustainable development.
In this case, giving up high-interest deposits has become an inevitable choice for commercial banks. Although high-interest deposits can attract more customer funds, they will also increase the cost of funds and risks of commercial banks. Therefore, commercial banks need to reasonably control the cost of deposits and avoid over-reliance on high-interest deposits to maintain profitability on the premise of ensuring the liquidity and safety of funds.
Second, the previous "innovations" such as call deposits are also a potential threat to banks' risk management. Smart Notice Deposit blurs the boundaries between deposit products and wealth management investment products. Traditional deposit products are usually low-risk and low-yield, while wealth management investment products may involve higher risks. The high-interest nature of Smart Call Deposit makes it somewhat closer to financial investing, but many investors may not be aware of it. As a result, investors may face unexpected losses when market conditions change or when there is a problem with bank liquidity.
What's more, smart call deposits also pose a challenge to banks' liquidity management. As these products typically allow investors to withdraw principal and interest in advance at short notice, banks need to maintain sufficient liquidity to account for possible outflows. If banks mismanage their liquidity, they can fail to pay their principal and interest on time, leading to a crisis of confidence and reputational damage.
In addition, smart call deposits can also increase volatility and instability in the market. Since these products are usually linked to market interest rates, when market interest rates fluctuate greatly, the interest rate of Smart Call Deposits will fluctuate accordingly. This can lead to frequent adjustments in investment strategies and capital allocation, which can increase market volatility and instability.
As a result, regulators have also seen these so-called "innovations" motivate banks to over-pursue short-term gains and neglect long-term sound operations, thereby accumulating systemic risks. In recent years, regulators have strengthened the supervision of innovative deposit products such as smart call deposits, which has also set a clear tone for the removal of call deposits.
Third, lowering interest rates is also a double-edged sword for banks. The positive effect of lowering the deposit rate on banks is mainly reflected in the reduction of the cost of debt. High-interest deposit products usually mean that banks need to pay more interest to depositors, which increases the bank's operating costs. Therefore, reducing the cost of high-interest deposit products can reduce the cost of liabilities of banks and improve profitability.
However, there are also some potential risks associated with lowering deposit rates. The shrinking returns on assets provided by bank deposits may cause some savers to seek other low-risk asset management products with higher yields. As a result, banks may face greater pressure to collect deposits, as depositors may transfer funds to other financial institutions or investment channels. In addition, if a large number of depositors are lost, banks may be exposed to liquidity risk, i.e., unable to meet customers' withdrawal needs in a timely manner.
On the one hand, the need for banks to reduce risk has led them to continuously reduce the so-called "innovative" products over the years, and on the other hand, the low returns have brought about the loss of users, and this intermediate choice is extremely important.
Fourth, for ordinary people, the current bank interest rate is getting lower and lower, do we have a good disposal strategy? There are still some methods worth considering:
The first is to reduce the level of debt ahead of schedule. For those who are burdened with debts such as mortgages and car loans, early repayment of debts after the deposit rate drops can reduce future interest expenses. In an environment of lower interest rates, prepayment is more reasonable if the interest on the deposit does not cover the interest on the loan.
However, before deciding to make a prepayment, you need to carefully calculate the costs and benefits of prepayment. Some loans may have prepayment penalties or processing fees, and you need to make sure that these fees don't make prepayment meaningless. In addition, you need to consider your cash flow situation to ensure that early repayment does not affect other necessary expenses.
The second is to carry out large-scale consumption in advance. In a low interest rate environment, if households have large spending needs, early spending can take advantage of the current low interest rate environment to avoid the increased costs caused by rising interest rates in the future. However, spending ahead of time requires careful consideration to ensure that these expenditures are necessary and reasonable. At the same time, you also need to consider your income situation and future cash flow to ensure that your consumption does not put too much financial pressure on you.
The third is to look for some investment targets with higher returns. In an environment with low interest rates, it is a good choice to choose some wealth management products or funds with lower risk but relatively higher returns. These products can increase the yield of funds to a certain extent and help protect against the effects of inflation.
However, investment is risky, and you need to carefully assess your risk tolerance and investment objectives when choosing wealth management products or funds. At the same time, it is necessary to understand the investment direction, risk-return characteristics and other information of the product, and avoid blindly following the trend or listening to unreliable investment advice. In addition, investments need to be held for a long time, do not expect high returns in the short term, and avoid frequent trading due to market fluctuations.
In any case, in the face of the decline in deposit rates, investors need to remain calm and rational thinking, and formulate reasonable coping strategies according to their actual situation. At the same time, it is also necessary to pay attention to market dynamics and policy trends in order to adjust their financial planning and investment strategies in a timely manner.