Key investment points
Event overview
1. According to caixin.com’s report on April 15, 2022, recently, the market interest rate pricing self-discipline mechanism held a meeting to encourage some small and medium-sized banks to reduce the floating upper limit of deposit interest rate by 10 basis points (BP). This measure is not mandatory, but the banks that make the adjustment may be beneficial to the MPA assessment.
2. On April 15, 2022, the central bank announced that it decided to reduce the deposit reserve ratio of financial institutions by 0.25 percentage points (excluding financial institutions that have implemented the deposit reserve ratio of 5%).
Core view
The era of harmony and profit transfer is coming, catalyzing the market of the banking sector! Continue to be firmly optimistic about the investment opportunities of bank stocks, recommend Societe Generale / Ping An + Nanjing / postal savings, pay attention to the make-up opportunities of state-owned banks, and recommend Bank of communications / Agricultural Bank of China / China Construction Bank.
Main points
1. Regulatory guidance to reduce the cost of bank liabilities. The central bank’s RRR reduction and regulatory guidance to lower the upper limit of deposit interest rate are expected to support the interest rate spread.
(1) the central bank’s RRR reduction: according to the central bank’s answer to reporters, the RRR reduction on April 15 is expected to reduce the capital cost of financial institutions by 6.5 billion yuan / year. Based on the static calculation of the data at the end of 2021, it can boost the bank interest margin by about 0.2bp.
(2) deposit cost: by encouraging some small and medium-sized banks to reduce the floating upper limit of deposit interest rate by 10bp and linking it with MPA assessment, it will help to improve the competitive pressure of deposits, guide the industrial decline of deposit cost and support the interest margin. At present, compared with other banks, the deposit pricing ceiling of the four major banks is 10bp lower for demand and 25bp lower for fixed term, and the downward elasticity of pricing is relatively small. At the same time, considering the limited downward space for the pricing of demand deposits and short-term deposits, assuming that the pricing of deposits with a term of more than one year in the four major banks decreases by 5bp and that of other banks decreases by 10bp, the static calculation can improve the bank interest margin by about 0.9bp. Among them, the small and medium-sized banks with high proportion of medium and long-term deposits have greater potential to improve the interest margin.
2. Banks are officially approaching the era of harmony and profit transfer. Previously, the National Security Council proposed to reduce the provision rate, and some investors misread it as unilateral profit transfer. The RRR reduction and deposit policy adjustment symbolize the coming of the era of positive harmony and profit transfer. The decline in the cost of bank liabilities will become a source of reasonable profit transfer. Finally, we will achieve a win-win situation in which banks have profits, entities have support and finance has dividends.
3. The steady growth policy is expected to increase continuously. The steady growth policy is expected to continue to increase in the future.
① monetary policy: under the background of guiding the bank’s liability side interest rate to decline first, the possibility of subsequent small interest rate reduction cannot be ruled out; ② Fiscal policy: according to the macro team of Zhejiang merchants, the economy may be underpinned by issuing special treasury bonds in the future; ③ Real estate related: continue to pay attention to the implementation of local urban policies, the driving role of real estate sales and supporting financing, and the exploration of new development models.
Risk tip: macroeconomic stall and substantial exposure of adverse.
