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The people's Bank of China authorizes the national interbank lending center to publish, On December 20, 2021, the quoted interest rate (LPR) in the loan market was 3.8% for the one-year LPR and 4.65% for the five-year LPR. Since the central bank reduced the one-year LPR and the five-year LPR by 20bp and 10bp respectively on April 20, 2020, the one-year LPR quotation has been reduced for the first time in nearly 20 months by 5bp, while the five-year LPR quotation remained unchanged.
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"Broad money" is expected to be realized gradually, and the pace of liquidity release is accelerated. Since the LPR quotation is obtained in the form of floating plus points on the basis of MLF interest rate, and the MLF interest rate announced by the central bank on the 15th of this month remains unchanged, it can be preliminarily inferred that the decline in LPR comes from the pressure drop of floating plus points of major quoted banks. There are two main reasons for the pressure drop: on the one hand, the self regulatory upper limit of deposit interest rate was changed from multiple to plus points in June this year, effectively reducing the cost of bank liabilities, So as to leave room for the reduction of loan interest rate; On the other hand, the margin of economic indicators such as social finance continues to be under pressure, and the urgency of "wide currency" in policy is highlighted. Combined with the RRR reduction measures on December 15, the liquidity release expectation will be gradually fulfilled, which will help to boost the macroeconomic expectation next year. Under the premise of the policy of "stability first and seeking progress while maintaining stability" and referring to the policy rhythm in recent years, it is expected that there will still be the possibility of reducing reserve requirements and interest rates in the first half of next year.
Corporate credit demand is expected to boost, and the tone of maintaining stability in the housing market remains unchanged. In November this year, the incremental structure of social finance showed a trend of weakening on balance sheet financing and supporting the bottom of bond financing. Banks still need to "impulse" through bill discount, and the demand for short-term and medium and long-term loans at the enterprise end needs to be improved. At the Symposium on the analysis of the monetary and credit situation of financial institutions held by the central bank on the 16th of this month, it was clearly required that "the scale of monetary credit and social financing should be increased reasonably and the credit structure should be further optimized". This reduction is mainly aimed at the one-year LPR, the enterprise financing cost will be further reduced, and the enterprise end loan demand will directly benefit, which is expected to optimize the social financing structure and inject new momentum into the recovery of the real economy. The 5-year LPR has not been adjusted, indicating that the policy still strictly controls real estate loans and adheres to the tone of "no speculation in housing and housing". For key areas such as small, medium-sized and micro enterprises and green credit, the benefits of multiple monetary policies are released together, so as to realize the "two hands" of total credit and credit structure.
Looking back on history, economic improvement and stronger certainty will boost the repair of bank valuation. In terms of net interest margin, the RRR cut on the 15th of this month reduced the capital cost of financial institutions by about 15 billion yuan per year, forming a strong hedge against the decline in asset yield brought by the interest rate cut. Therefore, in general, the impact of the interest rate cut on the bank's net interest margin is limited. Historically, the central bank cut interest rates twice in June and July 2012, and then various economic indicators improved, the economy bottomed out, and there were obvious signs of recovery. From September 26, 2012 to February 4, 2013, The bank (Shenwan) increased by 58.96% (the Shanghai and Shenzhen 300 increased by 25.77% in the same period), and the banking sector ushered in a "high light moment". The policy combination of reserve requirement reduction and interest rate reduction reveals that the policy force has been very clear. With the economic recovery trend, the logic of bank valuation repair will be more smooth.
Investment advice
Since the fourth quarter, a series of policy combinations such as RRR reduction, carbon emission reduction tools and interest rate reduction have guided the transmission from "wide money" to "wide credit". While the economic bottom support has been strengthened, the credit demand is expected to pick up. The banking sector is currently in the triple benefit of loose policy + bottom valuation + good asset quality. Banks with advantages such as small and micro loans and green credit are expected to break through the siege; Banks that cross the cycle with light businesses such as wealth management and comprehensive finance are expected to be revitalized. Therefore, we suggest paying attention to the structural opportunities in the banking sector, such as high-quality joint-stock banks with prominent small and micro loans and green credit, leading retail business, and characteristic urban commercial banks with deep cultivation of regional economy and abundant capital.
Risk statement
Covid-19 epidemic situation is repeated; The economic growth rate was lower than expected; The implementation of the policy is less than expected.
