After state-owned banks and some joint-stock banks lowered the interest rates of time deposits with a term of more than one year and large certificates of deposit, a number of small and medium-sized banks have also followed up recently. On May 22, the reporter of Beijing Business Daily found that Bank Of Ningbo Co.Ltd(002142) , Bank Of Suzhou Co.Ltd(002966) , Suzhou rural commercial bank, Bank Of Hangzhou Co.Ltd(600926) , Zhangjiagang rural commercial bank have successively made a voice to the outside world and will adjust the deposit interest rate and price in combination with the market situation. At present, some of the above-mentioned banks have taken actions to reduce the time deposit interest rate, and the interest rate of deposit products of some banks with a term of 3-5 years has been reduced by 10-25 basis points. In the view of analysts, the decline of deposit interest rate is conducive to reducing the cost of liabilities and improving the interest margin. It is expected that more small and medium-sized banks will reduce deposit interest rate in the future, but on the whole, the downward range of interest rate is expected to be limited.
several small and medium-sized banks cut deposit interest rates
After the regulation encouraged small and medium-sized banks to reduce the floating ceiling of deposit interest rates, many banks claimed that they would make corresponding adjustments in combination with market conditions. On May 22, the reporter of Beijing Business Daily found that Bank Of Ningbo Co.Ltd(002142) , Bank Of Suzhou Co.Ltd(002966) , Suzhou rural commercial bank, Bank Of Hangzhou Co.Ltd(600926) and Zhangjiagang rural commercial bank all mentioned that they would adjust the deposit listing price and pricing strategy reasonably in accordance with the regulatory orientation and in combination with the market conditions. Among them, Zhangjiagang rural commercial bank made it more clear that “at present, interest rate pricing has been lowered for some term deposits”.
After the public statement, what is the deposit interest rate of each bank? Beijing Business Daily reporter’s investigation on May 22 found that at present, the time deposit interest rates of Bank Of Suzhou Co.Ltd(002966) , Bank Of Hangzhou Co.Ltd(600926) , Zhangjiagang rural commercial bank and Zhangjiagang rural commercial bank have changed from 3 months to 5 years.
“It was just lowered last week, and now it is generally lowered. The interest rate of each bank is the same.” Bank Of Hangzhou Co.Ltd(600926) a staff member in Hangzhou told the Beijing Business Daily that at present, the interest rates of the bank’s three-month, half year, one-year, two-year, three-year and five-year ordinary time deposits are 1.4%, 1.65%, 1.95%, 2.45%, 3% and 3% respectively. Compared with the previous interest rates, they have been reduced by 3 basis points, 4 basis points, 8 basis points, 7 basis points, 8 basis points and 25 basis points respectively.
Bank Of Suzhou Co.Ltd(002966) customer service staff also revealed that the bank’s time deposit interest rate has been lowered recently. At present, the 3-year and 5-year ordinary time deposits are 3.15%, but the specific interest rate will fluctuate according to the outlet. In addition, according to an interview with the Beijing business daily, the interest rates of 3-year and 5-year ordinary time deposits of Zhangjiagang rural commercial bank are also 3.15%. The customer service staff of the bank said that the above interest rates were lowered on May 18.
Turning to the reasons why many small and medium-sized banks have successively lowered deposit interest rates, China Everbright Bank Company Limited Co.Ltd(601818) financial market analyst Zhou Maohua said that the central bank had previously issued the policy tool of “total amount + structure”, which has reasonable and abundant market liquidity. The regulatory authorities also encouraged small and medium-sized banks to replenish capital through multiple channels to effectively alleviate the pressure on bank liabilities; At the same time, because the economy is facing a complex environment that exceeds expectations and the demand for real financing such as investment and consumption is weak, on the one hand, the kinetic energy of bank expansion of deposit liabilities is slightly insufficient; On the other hand, since the beginning of the year, the deposits of residents and enterprises have increased significantly, and the “oversupply” of the deposit market has pushed some banks to reduce deposit interest rates; In addition, some small and medium-sized banks can reasonably reduce the cost of liabilities, boost credit demand, and effectively reduce the profit erosion caused by the narrowing of interest margin by reducing the deposit interest rate; In addition, some banks cut deposit interest rates, which is conducive to MPa assessment.
reduce the cost of debt and improve the net interest margin
Small and medium-sized banks have lowered deposit interest rates, which has something to do with policy guidance. According to media reports, 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); This requirement is not mandatory, but the bank making the adjustment may be beneficial to its macro Prudential assessment (MPA).
According to the investigation by the reporter of Beijing business daily, in addition to the above-mentioned banks that said they would adjust the deposit interest rate accordingly in combination with the market situation, Bank Of Qingdao Co.Ltd(002948) recently also lowered the time deposit interest rate. According to the customer service personnel of the bank, the three-year and five-year time deposits of the bank have been reduced by 10 basis points, 3.3% and 3.2% respectively.
What impact will the reduction of deposit interest rate have on banks? Yu Baicheng, President of zero one research institute, believes that for small and medium-sized banks, the reduction of deposit interest rate reduces the cost of liability side and helps to improve the net interest margin of banks. However, under the background of policy promotion and downward economic growth, the loan interest rate also showed a continuous decline. On May 20, the quoted interest rate (LPR) of the loan market decreased by 15 basis points over a five-year period. Therefore, the overall interest margin of banks is still in the trend of narrowing.
According to the statistics, only Ping An Bank Co.Ltd(000001) , Bank Of Jiangsu Co.Ltd(600919) , China Zheshang Bank Co.Ltd(601916) and Bank Of Nanjing Co.Ltd(601009) 4 of the 42 listed banks in A-share market rebounded in 2021. The net interest margin of Bank of Lanzhou was the same as that of the previous year, and the net interest margin of the other 37 banks decreased by 1-36 basis points compared with the end of the previous year. The narrowing trend of interest margin in the first quarter of 2022 continues. The net interest margin of 31 banks has declined compared with the same period last year, and the net interest margin of 33 banks has declined compared with the end of last year.
“The reduction of deposit interest rate will help alleviate the pressure of narrowing the debt cost and net interest margin of some small and medium-sized banks.” Zhou Maohua pointed out that by reducing the deposit interest rate, banks will help alleviate the cost of liabilities and make reasonable profits for the real economy, promote the improvement of real financing demand, accelerate the economic recovery, and increase the activity of money creation, thus promoting the expansion of bank assets and liabilities.
interest rate decline is expected to be limited
From the perspective of the industry as a whole, on May 10, the central bank released the implementation report of China’s monetary policy for the first quarter of 2022. According to the report, state-owned banks such as the postal savings bank of China Construction diplomatic relations between industry and agriculture and most joint-stock banks have reduced their fixed-term deposits with a term of more than one year and the simple interest rate of large deposits in late April, and some local legal person institutions have also reduced accordingly. According to the latest survey data, from April 25 to May 1, the weighted average interest rate of new deposits in financial institutions across the country was 2.37%, down 10 basis points from the previous week.
What impact will the reduction of deposit interest rate have on customers who prefer time deposits? Yu Baicheng said that in view of the economic situation and the trend of epidemic prevention and control, citizens’ consumption ability and confidence are affected, and the losses in financial markets such as stock market funds, citizens will be more conservative in financial choices and increase their willingness to deposit. Therefore, in this context, a small decline in deposit interest rates will not change depositors’ deposit choices.
“Generally speaking, customers who prefer time deposits are stable customers and prefer principal preservation and stable income.” Zhou Maohua also believes that in the current environment of relatively strong demand for deposits in the market, the overall impact of the reduction of deposit interest rate on deposit preference customers is limited. He suggested that banks can launch other stable financial investment products to provide customers with multiple choices.
For the subsequent trend of deposit interest rate, Zhou Maohua expects that more small and medium-sized banks will reduce deposit interest rate, reasonably reduce loan interest rate, effectively reduce the financing cost of the real economy and promote the credit demand of the real economy. It is suggested that small and medium-sized banks continue to improve internal governance, focus on the main business, enhance the ability of operation and risk control, better serve small and micro enterprises and private enterprises, cultivate core competitiveness and improve differentiated competitiveness.
“Since the beginning of this year, the decline of deposit and loan interest rates is the result of the superposition of factors such as monetary policy supporting steady economic growth and reducing the financing costs of the real economy under the background of economic weakness. However, at present, the United States and other overseas markets have entered the interest rate increase cycle. In order to maintain the internal and external balance, China will adopt more targeted monetary support tools in areas greatly affected by the epidemic, and the downward range of interest rates is expected to be limited.” Yu Baicheng analyzed.
