The end of an era? A number of banks collectively removed this business, and the days of tightening clothes and food are still coming

President's Essentials

2024-05-14 09:48Published in Beijing

Text: Jiahe Editor: Gu Ning   

Let's look at a set of data: in the first quarter of this year, among the 42 listed banks, 14 had a positive year-on-year increase in net interest income, and 8 had a year-on-year decline of more than 10%. In other words, in the first quarter of this year, more than 60% of listed banks suffered net interest income losses, and nearly 20% of listed banks experienced double-digit declines.

The original business model of making profits by earning interest rate differentials began to reverse unwittingly, and banks had no choice but to use the money they earned to make up for the losses caused by the interest rate difference between deposits and loans.

On May 10, the Bank of Communications announced that it would terminate the Shuangli deposit business on May 15, 2024. It is worth noting that this is not the first case of a commercial bank delisting its deposit business this year. Prior to this, China Merchants Bank, China Everbright Bank, Bohai Bank, Bank of Xiamen, Dalian Rural Commercial Bank and other banks have successively issued announcements to remove smart notice deposit products from the shelves in May.

In addition to removing products with higher interest rates, more banks have adopted "fancy self-help" methods.

The "delisting tide" of smart notice deposits is the end of an era

In the past, banks used to lure customers to deposit their spare money for a fixed term with high deposit rates, but that is a thing of the past. Commercial banks are trying to keep costs down as much as possible in various ways in an attempt to maintain a balance between expenditures and revenues.

All kinds of indications show that due to the pressure of excessive deposit costs, commercial banks are now more likely to deposit short- and medium-term deposits than long-term deposits. It not only took the initiative to reduce the interest rate on long-term deposits, but also took the initiative to remove a number of smart products that attracted customers to save from the shelves.

On May 10, Bank of Communications announced on the APP that in accordance with the relevant provisions of Article 12 of the Bank of Communications Shuangli Deposit (Ordinary Version) Business Agreement and the Bank of Communications Shuangli Deposit (Super Version) Business Agreement (hereinafter referred to as the "Shuangli Deposit Business Agreement"), the Shuangli Deposit Business Agreement signed by the customer and Bank of Communications will be automatically terminated from the implementation date of this announcement. After the termination of the agreement, Bank of Communications will no longer provide customers with services such as opening Shuangli deposit sub-accounts and depositing transfer funds.

According to the rules for the use of customer funds, the debit card held by the customer will automatically transfer the excess funds (minimum 50,000 yuan) to the call deposit account under the premise of the preset current deposit amount (minimum 5,000 yuan), so that the customer can maintain the liquidity of funds while having the opportunity to obtain the corresponding current deposit income in the same period.

It is worth noting that this is not the first case of a commercial bank delisting its deposit business this year. Prior to this, China Merchants Bank, Everbright Bank, Bohai Bank, Bank of Xiamen, Dalian Rural Commercial Bank and other banks have successively issued announcements to remove smart notice deposit products from the shelves in May.

"Quick Facts of the President" learned that the removal of smart notice deposit products from the shelves of various banks may be to reduce the cost of deposits, and to meet regulatory requirements.

In fact, as early as the middle of last year, the regulatory authorities already required bank call deposit business. In May 2023, the relevant regulators required banks to adjust the self-discipline upper limit of agreement deposits and call deposits, with the benchmark interest rate plus 10BP for Chinese state-owned banks and 20BP for other financial institutions. At the same time, the supervision also requires banks to suspend the issuance of notice deposits that do not require customer operation and are intelligently automatically rolled over, and the stock will naturally expire.

In addition to state-owned banks, several banks such as Ping An Bank, Dongying Bank and Bank of Zhengzhou have issued notices that they will suspend the sale of "smart notice deposit" products and reduce the interest rate of related products.

Dong Ximiao, chief researcher of Zhaolian, said that the removal of "smart notice deposits" is in line with the policy orientation of reducing deposit interest rates, which is conducive to continuously reducing the cost of bank liabilities and making the real economy more sustainable for banks.

In April this year, the self-discipline mechanism for market interest rate pricing issued the "Initiative on Prohibiting the Preservation of Deposit Market Competition Order through Manual Interest Replenishment and High Interest Solicitation of Deposits", which clarified that banks should include manual interest replenishment in the scope of monitoring and management, and strictly prohibit the disguised violation of the deposit interest rate authorization requirements or self-discipline ceilings through prior commitments and manual interest payments at maturity, and require banks to complete the rectification by the end of April 2024.

Living a tight life, the banks save money like this

Cost savings have become an important focus for banks.

According to the data disclosed by the State Administration of Financial Supervision and Administration, the net interest margin of commercial banks in 2023 has been lowered to 1.69% from 1.74% at the beginning of the year, which has fallen below the "warning line" of 1.8% designated in the Implementation Measures for Qualified Prudential Assessment (2023 Revision) issued by the regulator last year. At the same time, at the 2023 annual results conference of various banks, many banks revealed that reducing the cost of interest payment will be the top priority of this year's work.

The "Governor's Quick Facts" noted that since the beginning of this year, listed banks have significantly reduced their interest payment costs in response to the narrowing of interest rate spreads. However, there are differences in the cost reduction measures that banks of different natures focus on.

Specifically, for example, not long ago at the annual report conference of the Postal Savings Bank, Xu Xueming, vice president of the bank, introduced that with the rapid decline in interest rates and the rapid narrowing of the net interest margin of the interbank, the Postal Savings Bank is brewing a new round of adjustment of the agency rate of the postal and banking banks.

It is understood that when the H-share listing in 2016, the Postal Savings Bank further clarified the active adjustment and passive adjustment mechanism of the deposit savings agency fee, and after a lapse of 6 years, the passive adjustment was triggered for the first time in 2022.

Xu Xueming further said that since the second half of last year, the Postal Savings Bank has begun to prepare for a new round of adjustment. The Postal Savings Bank has studied a variety of methods and carried out multiple rounds of simulation calculations, and the new round of savings agency rate adjustment will adhere to two principles: first, business sustainability, fully absorb the opinions of all parties, and ensure that the pricing is scientific and fair; The second is to adhere to mutual benefit and win-win results, especially to fully tap the strong resource endowment advantages of agency outlets, and promote the realization of the effect of self-operated and agency outlets one plus one is greater than two. At the same time, through scientific bidding, we will further promote the optimization of deposit structure, reduce the cost of interest payment, and stabilize the interest margin.

In addition, a number of national joint-stock banks have adjusted their plans for the issuance of large-value certificates of deposit, time deposits and other products (including reducing the scale of issuance and removing some products from the shelves). For example, China Merchants Bank removed the 3-year and 5-year certificates of deposit from the bank app, leaving only the 2-year certificates of deposit, and the 2-year deposit interest rate is below 2.15% annualized interest rate.

In terms of small and medium-sized banks, for example, Bank of Xiamen has launched three measures to reduce the cost of liabilities and improve net interest margins: first, remove smart notice deposits; Second, the annual interest rate of some existing personal 7-day call deposits has been reduced from 2.1% to 1.55%; The third is to stop the automatic rollover of personal notice deposits.

In 2024, in the context of promoting a steady and moderate decline in the cost of comprehensive social financing, the net interest margin of banks may also decline. Dong Ximiao believes that "commercial banks will continue to reduce deposit interest rates to further reduce the cost of funds and ease the pressure of narrowing interest rate spreads." In addition to lowering deposit interest rates, commercial banks should also reduce interest subsidies and fees other than interest on deposits, so as to further reduce the hidden costs of deposits. ”

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