Author: Du Chuan
In the context of the continuous reduction of deposit interest rates, the scale of deposits in my country's resident sector has soared, and this phenomenon has been widely concerned by the market.
According to data released by the People's Bank of China on February 10, RMB deposits increased by 6.87 trillion yuan in January, an increase of 3.05 trillion yuan year-on-year.
Among them, household deposits increased by 6.2 trillion yuan, a new high in a single month.
In fact, the increase in household deposits has been very obvious in 2022, with an increase of 17.84 trillion yuan in household deposits for the whole year, far higher than the 9.9 trillion yuan in 2021.
At the same time, time deposits increased significantly.
This phenomenon has been interpreted by many market experts as the increase in residents' willingness to save for precautionary purposes, the decline in residents' risk appetite, and the decline in consumer spending, which have led to a surge in deposits.
However, regarding the above point of view, some analysts believe that there is a certain misunderstanding, that is, to confuse savings with deposits.
These analyzes tend to believe that the sharp increase in residents' deposits is not caused by residents' "savings" during the epidemic, and that residents' refusal to buy properties or stocks is not the main reason for the sharp rise in residents' deposits.
What is the difference between savings deposits and excess savings?
What are the reasons for deposit termization?
The scale of deposit growth far exceeds the scale of loan growth. What impact will it have on banks?
How long will it take for these "excess savings" to be converted into consumption and investment in the future?
People's enthusiasm for saving money soars
The increase in resident deposits in January hit a new high in a single month, which once again aroused market attention.
According to data from the central bank, RMB deposits increased by 6.87 trillion yuan in January, an increase of 3.05 trillion yuan year-on-year.
Among them, household deposits increased by 6.2 trillion yuan, which continued to increase by 790 billion yuan year-on-year on the high base of last year.
In addition, M2 in January increased by 12.6% year-on-year, and the growth rate was 0.8 and 2.8 percentage points higher than the end of last month and the same period of last year, respectively, the highest level since mid-2016.
Wen Bin, chief economist of China Minsheng Bank, said that the most important factor supporting the new high growth rate of M2 in January is the deposits of residents. At the same time, the enhanced derivative capacity under the high credit growth and the fiscal front-end force have also increased money supply.
Before the Spring Festival, enterprises concentrated on paying salaries and benefits, and corporate deposits were transferred to household deposits. At the same time, due to factors such as low personal consumption willingness, residents chose to save their income instead of consumption, boosting M2.
Not only that, there is also a hidden mystery behind the structure of residents' deposits: the growth of deposits is mainly reflected in the obvious increase in time deposits.
Wind statistics show that 79% of new resident deposits in 2022 are time deposits.
In addition, investors' frenzied grabbing of large certificates of deposits that has continued since 2022 is also a major manifestation of the deepening of deposit termization.
Mingming, the chief economist of CITIC Securities, told reporters that the trend of fixed-term deposits is due to the poor profit expectations of enterprises on the one hand, so there will not be too much funds that can be used at any time in the account, and the value of residents’ assets and the other hand. Uncertainty in income levels has increased, the willingness to buy houses has decreased, and the willingness to save has increased.
Mingming also pointed out that for banks, the increase in short-term debt-side funding sources and the reduction of debt-side pressure will help reduce the pressure on interest margins, but the long-term balance of assets and liabilities will lead to a decline in credit interest income, reducing the profitability of banks. Business does more harm than good.
Saving money is not because you don’t buy houses or stocks
As for why residents' deposits continue to increase, heated discussions in the market have continued since 2022.
Over the past three years of the epidemic, residents' deposits have increased significantly, which is a significant increase compared with historical trends.
From the perspective of the whole year of 2022, RMB deposits will increase by 26.26 trillion yuan, an increase of 6.59 trillion yuan year-on-year.
Among them, household deposits increased by 17.84 trillion yuan, while household deposits in 2021 increased by 9.9 trillion yuan.
In this regard, many analysts believe that this growth reflects that against the background of increasing income uncertainty, suppressed consumption demand, and large fluctuations in the wealth management market, residents have a strong willingness to save and a low willingness to consume.
However, different from the above point of view, some recent analysis pointed out that the main reason for the substantial increase in residents' deposits is not "saving".
The fact that residents do not buy properties or stocks is not the main reason for the sharp increase in residents' deposits.
CICC pointed out in the research report that there are three misunderstandings in the current general view on the high growth of residents' deposits: one is to confuse savings with deposits, and the other is to believe that the sharp increase in residents' deposits is mainly due to residents' "saving" during the epidemic. Yes, the third is that there is a view that residents do not buy houses or stocks during the epidemic is the main reason for the increase in residents' deposits.
CICC believes that in a credit money society, loans create deposits, and saving is a virtue, but if the overall consumption propensity of households drops sharply (the saving rate rises sharply), the macro result will be a weaker economy, lower income, and weaker loans. Deposits have also weakened instead of rising.
In other words, the overall sharp decline in household propensity to consume may result in a decline in deposits rather than an increase.
He also pointed out that the sharp increase in resident deposits is mainly a manifestation of fiscal and quasi-fiscal efforts.
Therefore, the reason for the above-mentioned misunderstanding is to confuse the concepts of savings and deposits.
CICC pointed out that savings refers to the national income minus the consumed portion within a certain period of time (ie savings=income-consumption), which is a concept of the real economy.
Deposit is a monetary concept. In the framework of monetary analysis, an important function of banks is the function of money creation, and loans create deposits.
If the central bank and commercial banks are regarded as a financial system, then money is created either by loans to the government, loans to the private sector, or loans to foreign institutions.
In the process of issuing loans to create money, banks generate deposits on the liability side of their balance sheets, that is, loans create deposits.
Therefore, in the credit money society, when analyzing the reasons for the increase in deposits, the framework of currency analysis should be used instead of the framework of entity analysis (loanable funds theory).
There are still obstacles in the transformation of trillions of excess savings into consumption
In addition, regarding the "excess" growth of residents' deposits, a common market view is that in 2022, the new deposits of residents will be nearly 18 trillion yuan, an increase of 8 trillion yuan year-on-year, so the scale of residents' "excess savings" is about 80,000 yuan. As the economic situation and financial market will improve in 2023, these "excess savings" will flow back to the financial market and support the recovery of consumption and real estate.
In this regard, institutions generally believe that there will indeed be an obvious phenomenon of "excess savings" in 2022.
But there are different estimates of the size of excess savings.
Generally speaking, savings that are significantly higher than the usual savings in previous years are called "excess savings."
Mingming told reporters that excess savings refers to the part of savings that exceeds the normal potential level in that year.
In addition, savings deposits are not completely equivalent to savings. With the development of the financial market, more and more low-risk financial products are replacing deposits as a tool for household wealth storage. Therefore, the growth of deposits cannot fully reflect the scale of excess savings.
"As for the judgment of the specific scale of excess savings, since the asset allocation methods of residents have become more abundant with the development of the financial market, it is difficult to measure it only by the growth of deposits, but it can be determined that the amount of funds is trillions of dollars." Mingming said.
A previous CICC research report also pointed out that the market may overestimate "excess savings".
It is also estimated that the scale of residents' "excess savings" in 2022 may be around 3 trillion yuan.
Whether excess savings will be transformed, and how long it will take for consumption, real estate, and capital markets to benefit, is another focus of the market.
It is worth noting that in 2022, the growth of deposits in the resident sector will far exceed the growth of loans. Deposits will increase by 14.01 trillion yuan more than loans, and there will be a large gap between the two.
Liu Lei, secretary-general of the National Balance Sheet Research Center of the National Finance and Development Laboratory, believes that the main reason for the sharply higher growth of deposits than loans in 2022 is the increase in banks' purchases of government bonds and the weakening of shadow banking credit creation.
"Excess savings have little to do with future consumption and investment. Residents' consumption and investment will increase in 2023, mainly due to the release of the epidemic and increased confidence in the recovery of future economic growth, not due to excess savings. That is to say, Even with an increase in consumer spending and housing investment, it will not change the trend of the widening gap between residents’ deposits and loans.” Liu Lei emphasized.
Mingming also believes that it is not appropriate to overestimate the boost of excess savings to consumption.
He said that judging from the recently released financial data, residents' deposits have increased rapidly but loans are still relatively weak, the real estate market has not been boosted significantly, and the transformation of excess savings into consumption is still facing obstacles, but considering the general trend of economic recovery and consumption recovery , At the time of the handover between the first and second quarters, the restoration and improvement of fundamentals is expected to drive the consumption of precautionary savings.