Recently, a number of rural commercial banks and village and township banks have successively issued announcements on deposit interest rate adjustments, reducing deposit interest rates for one-year, three-year and five-year periods, ranging from 10 basis points to 40 basis points. This is the first time that small and medium-sized banks have lowered their deposit interest rates after the large state-owned banks and joint-stock banks lowered the listed interest rates of medium and long-term time deposits on a large scale a few days ago. What will be the impact of the deposit rate cut? How will it affect the wealth management market in the future?

A number of banks followed

In September 2022, June 9 and September 2023, major financial institutions took the initiative to reduce deposit interest rates three times, and the interest rates on medium- and long-term time deposits were lowered even more, and the degree of marketization of deposit interest rates has been significantly improved.

In September this year, the weighted average interest rate of new time deposits was 9.2%, a decrease of 04.2022 percentage points from April 4.

Industry insiders said that the adjustment of a number of rural commercial banks and village and township banks is mainly to follow up the downward adjustment of national banks.

In recent years, under the guidance of the market-oriented adjustment mechanism for deposit interest rates, commercial banks have continuously optimized the allocation of financial resources. In particular, this year, banks have made reasonable adjustments to the level of deposit interest rates with reference to changes in market interest rates. Ming Ming, chief economist of CITIC Securities, said that deposit cost control has always been one of the important topics in the asset and liability management of commercial banks.

Liang Si, a researcher at the Bank of China Research Institute, said that the recent overall decline in money market interest rates has led to a longer-term deposit to lock in interest income, which to a certain extent has led to a tendency for deposits to be fixed and long-term, which has raised the cost of bank liabilities and exacerbated the pressure on interest rate spreads. Under such circumstances, banks flexibly adjust deposit interest rates according to changes in market supply and demand, taking into account their own operating conditions, which indicates that the market-oriented adjustment mechanism of deposit interest rates continues to be effective, plays a role in maintaining the order of market competition, and is conducive to maintaining the stability of debt costs and net interest margins, so as to achieve sustainable and stable operation and better support the development of the real economy.

What types of deposit rates still have room to fall? Ming Ming said that considering that the interest rates of three-year and five-year deposits of many banks are still higher than the yield to maturity of treasury bonds of the same maturity, especially call deposits and agreement deposits have the characteristics of similar demand deposits, but in actual practice, the interest rates are much higher than demand deposits, so there is some room for interest rate adjustment in such products. Subsequently, reducing the cost of bank deposits will continue to be a key focus, so as to promote banks to optimize their asset-liability structure and promote healthy operation.

Reduce the interest burden

With the continuous reduction of the LPR, the central bank has gradually pushed down the financing costs of the real economy and enterprises by guiding the loan pricing behavior of commercial banks, and the weighted average interest rate of new loans has fallen to a historical low.

"In the first three quarters, the one-year and five-year LPR fell by 20 basis points and 10 basis points respectively, driving the corporate loan interest rate further downward, and the weighted average interest rate on new corporate loans in September was 9.3%, 85 basis points lower than the same period last year." The relevant person in charge of the People's Bank of China said at the press conference on financial statistics in the third quarter of this year that the policy of reducing the interest rate of the first home loan in stock will be promoted to effectively reduce the interest burden of residents, improve consumer expectations, and enhance consumer spending power and consumer confidence.

At the end of September, the weighted average interest rate on existing housing loans was 9.4%, 29 basis points lower than the end of the previous month, achieving a significant decline.

In addition, with the continuous improvement of the formation and transmission mechanism of market-oriented interest rates, the effectiveness of the reform of the loan market prime interest rate has gradually become prominent, the transmission efficiency of monetary policy has been enhanced, and the cost of social financing has decreased significantly.

"In the context of the relatively rigid cost of bank debt, the reduction of loan interest rates has objectively compressed the interest margin space of banks. From the perspective of the entire commercial banking system, the net interest margin has fallen below 2022% since 2, and has been declining since then, although the second quarter is the same as the first quarter, and has not continued to fall, but it is still at a historical low. Net interest margin has become a major issue and challenge for banks to focus on when optimizing their asset-liability structure. "Mingming.

Recently, 42 A-share listed banks in China have successively released their third quarter reports for 2023, showing that revenue growth has diverged, and interest rate spreads are still under pressure.

Li Yifan, a researcher at the Bank of China Research Institute, said that the decline in net interest income was an important reason for the decline in revenue of listed banks. In the third quarter of 2023, the net interest income of listed banks was 3.22 trillion yuan, down 2.05% year-on-year. Correspondingly, the net interest margin of listed banks continued to decline, and from the disclosed information, the net interest margin of 35 banks decreased month-on-month.

In the face of the current complex business environment, deposits with high scale and obvious regularization characteristics have put pressure on the interest payment cost of banks' liabilities, and put forward higher requirements for banks' dynamic management capabilities of assets and liabilities. As banks steadily reduce their real lending rates, it will affect the level of loan income on the asset side of banks to a certain extent.

On the one hand, banks should strengthen internal control, exert non-interest income, and ensure the safety and popularity of assets; On the other hand, with the help of various financial derivatives toolboxes, we can improve the matching of assets and liabilities and the ability to hedge risks.

Wealth management options are diverse

According to the October 2023 financial statistics report released by the People's Bank of China, RMB deposits increased by 10.10 billion yuan in October, an increase of 6446.8312 billion yuan year-on-year. Among them, household deposits decreased by 6369.<> billion yuan.

The continuous reduction of deposit rates has made household deposits less attractive. How should investors take care of their "money bags"?

Experts suggest that there are many choices of wealth management products on the market, and investors can combine their own needs and risk-return goals, according to the characteristics of different wealth management products, make comprehensive judgments and diversify investments.

From the perspective of household asset allocation, many depositors who were accustomed to keeping their money in the bank for interest in the past have begun to try other ways of wealth management to invest. In the third quarter of this year, the number of bank wealth management products increased, and low-risk asset management products such as bank wealth management are expected to usher in incremental funds.

Yuan Yulai, founder and CEO of Rubik's Cube, believes that from the perspective of family financial allocation, residents' deposits still occupy the majority. However, with the reduction of deposit interest rates, funds with bank wealth management and stable income will usher in a period of development opportunities. "When choosing bank wealth management, treasury bonds, bonds, funds and other investments, we should do what we can and reasonably allocate financial products within our own risk tolerance." Yuan Yu came to remind.

Dong Dannong, a researcher at Puyi Standard, said that whether the wealth management market can continue to undertake such funds in the future puts forward higher requirements for the operation and management capabilities of bank wealth management institutions. For financial institutions, they should continue to improve their investment research capabilities and investment strategies, strengthen the management of net worth fluctuations, and help customers rationally understand the risk-return relationship while strengthening the ability to allocate large types of assets and investor education, so as to realize the transition from depositors to investors.

"The continuous reduction of bank deposit interest rates will promote the transfer of residents' savings." Yang Delong, chief economist of Qianhai Open Source Fund, said that the current capital market has been in the position of historical bottom, and many high-quality stocks are only two or three folds at the high point in terms of valuation, and many high-quality funds also have opportunities for layout. This may promote the transfer of RMB savings funds to the capital market, providing more financial support for the next round of bull market in the stock market.

Wang Baohui