On the 14th, the Bank of China App issued the Announcement on the Suspension of Follow-up Services for Personal Smart Notice Deposits, Call Deposits, and Automatic/Appointment Transfers (hereinafter referred to as the "Announcement"). According to the announcement, according to the relevant policy changes, the bank will stop the original personal intelligent notice deposit product on May 15, as well as the follow-up service of automatic transfer of the original call deposit and agreed rollover.
Since April, more than 20 banks have announced the termination of the smart notice deposit business. In the view of industry insiders, 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.
Intensive termination
According to the announcement of Bank of China, after the customer voluntarily terminates the contract or the bank ceases the service, the account will be used as before, and the functions of deposit, withdrawal and transfer will not be affected, but the funds in the account will be calculated according to the current deposit listed interest rate.
If you need to use funds, you need to establish a notice in advance and withdraw it on the agreed date, and if you do not establish a notice in advance or withdraw it according to the agreement, the interest will be calculated according to the listed interest rate of the demand deposit.
"This is a termination decision made in accordance with regulatory requirements, policy changes, and the management requirements of the self-regulatory mechanism for bank deposits." Bank of China online customer service staff said.
Among the large banks, the Postal Savings Bank and the Bank of Communications have also recently issued announcements on call deposits. Bank of Communications announced that the bank will terminate the Shuangli deposit (ordinary version/super version) business on May 15, 2024. From the date of implementation of the announcement, the dual-interest deposit business agreement signed between the customer and Bank of Communications will be automatically terminated. 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 online customer service of Bank of Communications, the Shuangli Deposit (Super Version) business refers to the business in which an individual customer signs a contract with BOCOM under the Pacific Debit Card held by the customer, and the BOCOM system automatically opens a call deposit sub-account according to the content of the agreement determined by the customer at the time of signing, transfers the funds from the current settlement account of the card to the call deposit, transfers it back at the expiration of the rollover deposit period, or links the expenditure according to the agreement, and calculates the interest on the funds in the current settlement account and the call deposit sub-account under the card according to the current deposit and call deposit respectively.
▲Source: Bank of Communications official website
According to the announcement of the Postal Savings Bank, from May 15, 2024, the stock of personal notice deposits (including Dream Plus Post Station) products that can be automatically rolled over will no longer be automatically rolled, and the maturity date of the call deposit products will be the maturity date of the last rollover cycle, and the account will not be automatically closed after expiration.
▲Source: Postal Savings Bank official website
National joint-stock banks are also taking action. On May 11, Huaxia Bank announced that the bank's personal stable profit Lingtong account (including personal stable profit one-day account and personal stable profit seven-day account) will be automatically terminated on May 13, 2024, and the funds of the personal stable profit account will be transferred to the contracted current account in the card after termination.
At the same time, Huaxia Bank also said that it has suspended the one-day revolving interest and seven-day revolving interest product signing functions from May 15, 2023, and terminated the one-day revolving interest and seven-day revolving interest stock business services on May 14, 2024. After the business is terminated, the one-day revolving interest account and the seven-day revolving interest account will be cancelled, and the funds in the account will be transferred to the customer's contracted settlement account.
▲Source: Huaxia Bank's official website
On May 10 and 13, IB issued two automatic termination announcements, one for individuals and one for enterprises. According to the announcement, in order to implement the relevant policy requirements, the bank's personal smart notice deposit product/smart notice deposit product for corporate finance customers will be automatically terminated from May 15, 2024. For customers who have already applied for the personal smart notice deposit business, the bank will settle the interest and automatically terminate the contract for the customer on the nearest interest settlement date, and the principal and interest of the product will be automatically transferred to the customer's current account.
▲Source: official website of Industrial Bank
According to the announcement of Everbright Bank, the accounts that have signed up for automatic rollover call deposits such as the Corporate Weekly Plan, Corporate Smart Deposit A (3/7 day deposit period) and Corporate Smart Deposit B (7-day deposit period) will stop automatically rolling over call deposits from May 15, 2024, and the funds will be transferred back to the contracted current account after the maturity of the accumulated call deposits, and then the system will automatically terminate the contract, and if there is any outstanding interest, it will be calculated according to the bank's current listing rate.
▲Source: Everbright Bank's official website
In addition to the above-mentioned banks, a number of national joint-stock banks such as China CITIC Bank, Minsheng Bank, Ping An Bank, Guangfa Bank, and Bohai Bank have recently issued notices on the suspension of smart notice deposit stock business (including personal and corporate banks).
Why termination?
It is understood that call deposit is a kind of deposit business that does not stipulate the deposit period when handling the withdrawal, and needs to notify the bank in advance to agree on the withdrawal date and amount. On the other hand, the smart notice deposit omits the links of "customer advance notification" and "customer notice and timely withdrawal", and automatically calculates the maximum return.
According to previous reports by a number of media outlets, in May 2023, the regulatory authorities issued a notice on the self-regulatory cap of agreement deposits and call deposits. Among them, large state-owned banks implement the benchmark interest rate plus 10 basis points, and other financial institutions implement the benchmark interest rate plus 20 basis points. At the same time, the regulator requires banks to stop issuing call deposits that do not require customer operation and are intelligently automatically rolled over.
In May last year, Ping An Bank and other banks announced the suspension of the sale of "smart notice deposit" products, and large state-owned banks such as Industrial and Commercial Bank of China, China Construction Bank, and Agricultural Bank of China removed the "smart notice deposit" function from the app.
On May 9, Qingdao Jimo Huimin Rural Bank issued the "Notice on the Change of Automatic Rollover of Profit and Call Deposits", which shows that "in order to implement the measures of the People's Bank of China to deepen the reform of the interest rate market, the policy of implementing a transition period of one year according to the original interest rate for the existing call deposits and profit deposits will be automatically terminated from May 15, 2024." ”
▲Source: Qingdao Jimo Huimin Village Bank WeChat public account
It can be seen that the relevant policies have set a one-year transition period, and now that the transition period is over, the stock of smart notice deposits will also be removed from the shelves.
Spreads may be tightened or eased
In addition to smart notice deposits, many banks have recently stopped selling medium- and long-term large-value certificates of deposit, and high-interest savings methods such as "manual interest compensation" have also been required to be rectified by regulators.
According to Dong Ximiao, chief researcher of Zhaolian, some banks have adjusted the issuance plans of large-amount certificates of deposit, time deposits, agreement deposits and other products (including reducing the scale of issuance, suspending some products, etc.), as well as removing smart notice deposit products, mainly to reduce deposit interest rates and reduce debt costs.
According to the data, the net interest margin of commercial banks will fall to 1.69% in 2023, the lowest since 2017. In addition, according to the research report of Huatai Securities, in the first quarter of 2024, the net interest margin of listed banks fell by 22bp year-on-year to 1.51%, driving net interest income to -3.0% year-on-year, which is an important factor dragging down revenue, among which the interest income of joint-stock banks and rural commercial banks fell relatively largely.
Zheshang Securities Research Report believes that the interest rate spread of listed banks in the first quarter of 2024 will fall better than expected, and the cost of debt will improve for the first time, hedging the downward pressure on the yield of the asset side. According to the data, the debt-side cost ratio decreased by 4bp quarter-on-quarter to 2.07%, improving for the first time since the fourth quarter of 2022, mainly due to the release of deposit interest rate cut dividends.
Huatai Securities research report pointed out that with the optimization of retail debt costs, the decline in net interest margin in the first quarter narrowed, down 2bp from the previous quarter.
Dong Ximiao believes that at present, deposit and loan interest rates have entered a downward channel, and the downward pressure on the net interest margin of commercial banks has emerged, but many banks are still keen to compete for more market share and customer resources, and various forms of high-interest savings have emerged in an endless stream. Banks should abandon the scale and speed complex, not simply pursue scale growth and market share, and not only maintain the steady growth of the deposit business, but also control the cost of liabilities within a reasonable range.
Source: Sino-Singapore Jingwei