On April 15, the A-share banking sector rose sharply in the afternoon, and the share prices of individual banks also hit a record high.
Market analysts believe that the sharp rise in the banking sector is not only related to the reduction of reserve requirements, but also because the expectation of the reduction of the upper limit of deposit interest rate is heating up.
today, it was rumored that the market interest rate pricing self-discipline mechanism held a meeting to encourage the floating ceiling of deposit interest rates of small and medium-sized banks to be lowered by about 10 basis points (BP), which is voluntary and non mandatory. The reporter of Shanghai Securities News learned that local city commercial banks have received notice today
In recent years, in the process of promoting the reform of quoted interest rate (LPR) in the loan market, the people’s Bank of China has also issued a number of supporting measures, including optimizing the deposit pricing method, so as to guide and reduce the cost of bank liabilities and create space for making profits to the real economy. Encouraging the reduction of the upper limit of deposit interest rate will reduce the debt cost of commercial banks and further improve the ability of commercial banks to support the real economy.
Interviewees told reporters that the reduction of the upper limit of deposit interest rate guided by market-oriented means will help banks stabilize the cost of liabilities and keep the interest margin stable, but the impact can not be overestimated.
the reduction of the upper limit of interest rate is conducive to stabilizing the cost of debt
China Merchants Securities Co.Ltd(600999) chief banking analyst Liao Zhiming believes that to encourage the reduction of the upper limit of deposit interest rate, we should first distinguish between time deposits and demand deposits. Secondly, for time deposits, they will not be adjusted until they expire.
Liao Zhiming said that at present, the interest rate of demand deposits in many banks is 0.3%, which is very low. Ideally, if the adjustment covers demand deposits, it will eventually help the cost of bank liabilities. According to his estimation, the proportion of all listed bank deposits in A-Shares is about 75%, so if the upper limit of deposit interest rate is lowered by 10bp, the debt cost will be reduced by 8bp at most If the demand deposit is not adjusted, in the near future, the whole debt cost of the banking industry will drop by about 4 bp.
In recent years, in the process of promoting LPR reform, the people’s Bank of China has also launched a number of reform supporting measures, including optimizing the self-discipline upper limit determination method of deposit interest rate in June last year, limiting the upper limit of deposit interest rate, restricting the high interest rate deposit solicitation behavior of individual banks, and strengthening the management of deposits in other places, so as to guide and reduce the liability end cost of banks and create space for transferring profits to the real economy.
When the monetary policy committee of the people’s Bank of China held its regular meeting in the first quarter of 2022, it proposed to strengthen the supervision of deposit interest rates, strive to stabilize the cost of bank liabilities, give play to the efficiency of the reform of quoted interest rates in the loan market, and promote the reduction of comprehensive financing costs of enterprises.
From the central bank’s monetary policy implementation report, the current changes in deposit interest rates
In this context, the market also has expectations for the further decline of the deposit interest rate ceiling. Zeng Gang, director of Shanghai finance and development laboratory, told reporters that at present, the deposit interest rate has lagged behind the interest rate of the financial market. Adjusting the upper limit of deposit interest rate through self-discipline mechanism to promote the overall decline of bank deposit interest rate is also in line with the trend of interest rate changes in the whole financial market, which helps to stabilize the bank interest margin; The decline of deposit cost also creates conditions for the decline of loan interest rate and reducing the financing cost of the real economy.
He also stressed that this is not a mandatory reduction. The self-discipline mechanism leaves room for different banks in different regions. It is a market-oriented guiding means, not a one-time benchmark interest rate adjustment. The two effects are completely different
banking stocks soared
Bank Of Nanjing Co.Ltd(601009) share price hit a record high
Affected by the expected reduction of the reserve requirement and the above news, the A-share banking sector rose sharply in the afternoon today.
Data show that the banking sector rose 1.62%, and the net inflow of main funds into the banking sector exceeded 1.7 billion yuan.
In terms of individual stocks, Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) , Bank Of Nanjing Co.Ltd(601009) rose by more than 5%, and Bank Of Chengdu Co.Ltd(601838) , Jiangsu Suzhou Rural Commercial Bank Co.Ltd(603323) rose by more than 4% Bank Of Hangzhou Co.Ltd(600926) , Bank Of Jiangsu Co.Ltd(600919) , Qilu Bank Co.Ltd(601665) rose by more than 3%. In particular, the share price of Bank Of Nanjing Co.Ltd(601009) hit a record high, closing at 11.9 yuan / share.
In fact, affected by many factors such as the wide credit environment and the strong recovery of bank fundamentals, since this year, the bank sector has been one of the few sectors and “safe havens” with good performance in the deep adjustment of the market.
Data show that since the beginning of the year, the entire A-share banking sector has increased by 4.49% and 9.8% in recent January. Individual bank stocks rose gratifying, such as Bank Of Chengdu Co.Ltd(601838) up 37.92%, Bank Of Nanjing Co.Ltd(601009) up 32.81%, Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) up 28.59%, and Bank Of Jiangsu Co.Ltd(600919) up 24.87%.
bank deposit pressure only increases but not decreases
Although the self regulatory mechanism encourages the upper limit of bank deposit interest rate to be reduced by 10bp, which is conducive to reducing the cost of liabilities and stabilizing the net interest margin that banks continue to narrow, it may become more difficult to pull deposits in the view of grassroots people in banks.
“I think it’s difficult to implement unless we don’t assess the deposit index.” The person in charge of a large bank branch in Shanghai admitted.
The pressure of commercial bank deposits is clearly reflected in the 2021 annual report of listed banks. According to data statistics, among the 25 listed banks that have disclosed their annual reports, the deposit growth rate of 20 banks in 2021 was significantly slower than that of the previous year The deposit growth rate of six banks, including China Everbright Bank Company Limited Co.Ltd(601818) , China Zheshang Bank Co.Ltd(601916) , China Construction Bank Corporation(601939) decreased from double digits to single digits. It is very difficult for individual banks to maintain deposit growth. For example, the growth rate of total deposits in Bank Of Zhengzhou Co.Ltd(002936) 2021 was only 1.46%, the growth rate of total deposits in China Minsheng Banking Corp.Ltd(600016) 2021 was only 1.28%, and corporate deposits even had negative growth.
The above-mentioned person said that at present, the epidemic is frequent across the country, the cash flow of enterprises is tight, and it is difficult to expand the deposit business. At present, interbank loans have been fully used up, and the willingness to take the initiative to reduce interest rates is very low.
The pressure on the liability side of banks has also been clearly reflected in the interbank certificate of deposit market. Since mid February, the issuance of interbank certificates of deposit has shown a trend of simultaneous increase in volume and price. According to the data of chinamoney.com, the interest rate of one-year interbank certificate of deposit recently issued by some banks is as high as 2.75%, with an interest margin of 10bp compared with the one-year MLF interest rate (2.85%).
