On May 20, the quoted interest rate (LPR) of the loan market was: the quoted interest rate of one-year loan market was maintained at 3.7%. The quoted market interest rate of loans with a term of more than 5 years was reduced from 4.6% to 4.45%, down 15 basis points.
After 4 months, LPR was lowered again. This time, LPR in 1-year period was not lowered, but it was lowered for 5 years, and LPR was lowered by 15bp. After the RRR reduction in April and the deposit interest rate decline, the loan market quotation was reduced, which was in line with the policy expectation of interest rate transmission and reducing the entity financing cost. The 5-year decline was slightly lower than the market expectation.
The steady growth policy was stronger than expected, which was good for banks. The 5-year LPR cut by 15bp is intended to promote real estate sales and investment demand and improve the financing demand of large and medium-sized enterprises. For banks, considering the transmission between assets and liabilities, the impact on interest margin is limited. Continuing the previous view, the economic data from April to may reflected that the impact of the epidemic increased the pressure of economic demand and the strength of policies increased significantly. The pressure of economic data from April to may has triggered economic and policy concerns, or disturbed bank investment. With the easing of the epidemic, the policy strength has been greatly strengthened until the economy is repaired. The disturbance may bring better opportunities for bank stocks to participate. Continue to recommend high-quality regional banks, prefer high-quality urban commercial banks, recommend Bank Of Chengdu Co.Ltd(601838) , Bank Of Jiangsu Co.Ltd(600919) , Bank Of Hangzhou Co.Ltd(600926) , Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) , Bank Of Nanjing Co.Ltd(601009) and other large banks, and pay attention to the value of Postal Savings Bank Of China Co.Ltd(601658) .
The long-term interest rate reduction is intended to alleviate the investment demand of large enterprises such as real estate demand and infrastructure
Reducing the five-year LPR may be intended to boost investment demand in real estate and infrastructure. First, five-year LPR linked mortgages and medium and long-term loans are more conducive to improving real estate sales demand and residents’ financing demand. Second, it is intended to stimulate investment demand, especially infrastructure and other demand. In the near future, the recent marginal decline of PMI large and medium-sized enterprises is more significant. In March, the total profit growth of local state-owned enterprises turned negative, and the long-term interest rate decreased, which is conducive to improving the medium and long-term financing needs of medium and large enterprises.
The quotation of one-year loan is 3.7%, and the interest rate has been low. At present, the MLF1 annual rate of 2.85% has not changed. Structural policy tools continue to support the continuous stability of small and medium-sized enterprises. When the interest rate has been low, it may be more important to ensure their liquidity.
New mortgage rates will fall further
Referring to our previous analysis, after the five-year LPR adjustment, the lower limit of mortgage interest rate is updated to 4.25%, equivalent to the benchmark interest rate of 95.5%. The lower limit of new mortgage is further opened, and the space for real estate relaxation is further increased. Since the beginning of this year, the relaxation of mortgage interest rate and policy has a weak impact on sales. The intensity of this interest rate reduction is increased to boost expectations. Although the adjusted lower limit is relatively low compared with the historical mortgage situation, the mortgage interest rate and mortgage lower limit are still not low compared with short-term loans and other medium and long-term loans, and there is still room for future policies.
The reduction of reserve requirement and deposit interest rate, and the reduction of loan interest rate were in line with expectations
On April 15, the central bank lowered the reserve requirement and established a market-oriented adjustment mechanism of deposit interest rate, which led to the decline of deposit interest rate. Recently, the interest rate of certificates of deposit has also declined. Wind data shows that the primary cost of urban commercial banks and rural commercial banks is about 2.5%. It is in line with expectations by reducing the cost of bank liabilities and transmitting it to the cost of entity financing.
The repricing of medium and long-term loans may be mainly in next year, and the net interest margin is limited.
Banks with a high proportion of mortgages and medium and long-term loans will have a repricing impact on the asset side yield next year. Considering that the debt cost has decreased this year, the impact of the absolute interest margin level may be limited.
Risk warning: large-scale outbreak of real estate default risk; The economy fell sharply, exceeding expectations.
