Up to 30 basis points! Joint-stock banks follow up with interest rate cuts to drive deposits to move to wealth management?

Following the announcement of the six major state-owned banks to adjust the listed deposit interest rates, on July 26, China Merchants Bank and Minsheng Bank also followed up with adjustments, and the annual interest rates of some deposit products fell by 30 basis points (BP). On the same day, Bank of China issued the first issue of personal large-denomination certificates of deposit in 2024, which attracted market attention.

"After the adjustment, the listed interest rate of the five-year RMB time deposit is 1.8%, and the actual implementation rate can only be 2.2% after the increase." An account manager of a state-owned bank in Shanghai told the International Financial News, "It is recommended to allocate assets in a diversified manner and lock in higher returns as soon as possible." ”

The interviewed experts pointed out that in the environment of declining deposit interest rates, the "price comparison effect" and "manual interest supplement" have stopped or promoted the transfer of deposit funds to the wealth management market. In times of low interest rates, investors should pay more attention to diversified asset allocation.

The fixed deposit interest rate will be reduced by up to 30BP

With the adjustment of LPR (loan prime rate) in July, a new round of deposit interest rate reduction this year has begun, and the listed interest rate has officially entered the "1" era.

On July 26, after the six major state-owned banks took the lead in lowering the deposit interest rate the day before, the deposit interest rates of China Merchants Bank and Ping An Bank also followed suit. Similar to the previous adjustment model, all banks have maintained a unified pace to reduce the interest rates of all types of demand deposits, time deposits and call deposits.

Specifically, China Merchants Bank and state-owned banks maintained a uniform decline, and medium and long-term deposits fell significantly. The demand deposit rate was lowered by 5 basis points from 0.20% to 0.15%. The interest rates on three-month, six-month and one-year lump sum deposits were lowered by 10 basis points to 1.05%, 1.25% and 1.35% respectively. The two-year, three-year and five-year lump sum deposit rates were all lowered by 20 basis points to 1.45%, 1.75% and 1.80% respectively. In addition, the interest rates on lump sum deposits, lump sum deposits, principal deposits and call deposits were all reduced by 10 basis points.

Minsheng Bank is slightly different, with the adjusted three-month, six-month, one-year, two-year, three-year and five-year fixed deposit interest rates of 1.10%, 1.35%, 1.55%, 1.6%, 1.8% and 1.85% respectively, of which the two-year decline reached 30BP.

"The fixed deposit interest rate has been lowered at 24:00 last night, and the interest rate on large certificates of deposit has not been lowered at present. A China Merchants Bank account manager told reporters. In the process of visiting the bank's outlets, the reporter of "International Financial News" learned that the bank's three-year large-value certificates of deposit have no quota.

A customer manager of Minsheng Bank said that the branch has not yet received a notice of interest rate reduction. "However, the listed interest rate is said to be lowered, and now the overall interest rate is also low. If you have not applied for a card in our bank, you can buy a new customer exclusive deposit, and the interest rate for three years can be 0.2% higher than that of ordinary deposits."

In addition, on the morning of July 26, Bank of China issued a notice saying that it will sell the first phase of personal large-value certificates of deposit in 2024 on July 26 and 27, 2024, with deposit periods ranging from one month to five years, with a minimum deposit of 200,000 yuan. Among them, the five-year annualized interest rate can reach 2.20%, but the three-year and five-year products are only available to certain customers. The reporter learned from the interview that only one-year products were sold on July 26, and the interest rate was 0.35 percentage points higher than the one-year fixed deposit listing rate.

Or drive the deposit to move to the financial management

According to Wen Bin, chief economist of China Minsheng Bank, there are several motivations for the deposit interest rate to be lowered again, including promoting the marketization of deposit interest rates, stabilizing the cost of bank liabilities, reducing the saving tendency of enterprises and residents, and improving the efficiency of capital operation.

"At present, the interest rate of corporate loans has entered the '3 era', and the mortgage interest rate in some cities has ushered in the '2 prefix', and the LPR of more than 1 year and 5 years will be lowered by 10BP again on July 22, which will make the interest rate of new and existing loans continue to decline." Wen Bin pointed out that "this time, the large state-owned banks once again took the lead in lowering the deposit interest rate, and the medium and long-term deposit interest rate fell even more, which is conducive to further reducing interest expenses, alleviating the long-term trend of deposits, stabilizing the cost of bank liabilities, and improving the profitability of banks and enhancing the sustainability of financial services for the real economy." ”

Shao Hui, an assistant professor at Zhejiang University International Business School (ZIBS), pointed out that "banks can respond to the general trend of declining interest rates by optimizing the asset-liability structure, increasing the rate of return on assets, and developing non-interest income, so as to keep interest margins basically stable and maintain a steady development trend." ”

Will the reduction of deposit interest rates trigger a large-scale deposit "move"?

Wen Bin pointed out that from the perspective of the wealth management market, the reduction of deposit interest rates may further drive deposits to "move" to wealth management. Since 2024, the wealth management market has continued to recover rapidly, and the growth rate of scale has far exceeded that of the same period in previous years, on the one hand, due to the reduction of deposit interest rates several times in 2023, which has increased the excess yield of wealth management products compared with deposits, and the "price comparison effect" has promoted the transfer of deposit funds to the wealth management market; On the other hand, regulatory adjustments such as the suspension of "manual interest supplement" have accelerated the disintermediation of deposits, and further provided incremental financial support for the wealth management market.

Investment should focus on diversification

As deposit rates continue to fall, what other investment channels are available for investors with low risk expectations?

"In the future, the deposit interest rate will be lower and lower, and if the risk appetite itself is relatively low, it is recommended to make a simple combination of two or three products. For example, the funds can be divided into three parts, and one short-term non-use fund can be deposited into the policy to build a safe underlying account; A shorter-term wealth management such as a fixed term or a one-year term purchase with an insurance portfolio for secondary appreciation; Another type of capital that is used more frequently can buy low-risk short-term bonds with higher liquidity. The account manager of a joint-stock bank suggested.

Another wealth manager of a stock bank suggested that you can buy insurance products to lock in a higher interest rate as soon as possible. "If you don't want the cycle to be so long, you can also consider certificate of deposit financial management, the risk level is only one level, mainly invested in deposit products, the cycle is generally about three months, and the yield is about 2.5%."

"In the face of the current reduction in deposit interest rates, investors should pay more attention to diversified asset allocation when managing their finances to reduce the impact of fluctuations in the return of a single asset." Shao Hui said.

How to allocate assets with low-risk expectations? Shao Hui suggested that investors should first consider increasing long-term deposits to lock in the current relatively high interest rate, or they can also consider buying large-denomination certificate of deposit products, which can usually provide slightly higher interest rates. At the same time, the deposit interest rate of some small and medium-sized banks may be higher, and investors can choose the right bank to deposit according to the actual situation. In addition to bank deposits, other financial management methods such as treasury bonds, cash management wealth management products, and reverse repurchase of treasury bonds can also be considered to achieve steady appreciation of funds.

Reporter Li Ruohan