Two new companies were added to the list of LPR quotation banks.

　　A few days ago, according to the official website of the People's Bank of China, the National Interbank Funding Center was authorized to issue an announcement on the adjustment of the loan prime rate (LPR) quoting bank.

The People's Bank of China guided the interest rate self-regulatory mechanism to conduct an assessment of LPR quoting banks on and off the market, and adjusted the LPR quoting banks based on the assessment results. The adjusted list of LPR quoting banks increased from 18 in the previous period to 20, with China CITIC Bank and Bank of Jiangsu added. .

The adjustment will be implemented from January 22.

　　This is the second time that the People's Bank of China has adjusted the list of LPR quotation banks since the reform of the LPR quotation mechanism in 2019.

　　As the latest LPR quotation will be ushered in on January 22, the market generally expects that the new LPR quotation will remain unchanged.

Added China CITIC Bank and Bank of Jiangsu

　　According to this adjustment, China CITIC Bank and Bank of Jiangsu have been added to the list of LPR quotation banks compared with before. This is also the return of CITIC Bank after two years.

　　LPR is a high-quality customer loan interest rate issued by the National Interbank Funding Center authorized by the central bank. It is quoted by commercial banks based on market supply and demand and other factors. It is supervised and managed by the market interest rate pricing self-discipline mechanism under the guidance of the central bank. In 2013 Officially launched in October.

　　In August 2019, the central bank officially announced the reform and improvement of the LPR formation mechanism.

The new LPR shall be submitted by each quoting bank to the National Interbank Funding Center before 9:00 on the 20th of each month (postponed if it is a holiday) in steps of 0.05 percentage points. The National Interbank Funding Center will remove the highest and lowest prices. The arithmetic average after the quotation is rounded to the nearest integer multiple of 0.05% is used to calculate the LPR, which is announced at 9:30 that day.

　　After the reform in 2019, the number of banks participating in the quotation expanded from the original 10 banks to 18.

The newly added quoting banks are all small and medium-sized banks of the same type that have greater influence on the loan market, stronger loan pricing capabilities, and better services for small and micro enterprises, which can effectively enhance the representativeness of LPR.

　　On January 19, 2022, the list of LPR quoting banks was adjusted. After the adjustment, the list of 18 LPR quoting banks was determined. Postal Savings Bank of China and Bank of Nanjing were newly shortlisted, while Bank of Xi'an and China CITIC Bank were not selected.

　　At the same time, in order to strengthen expectation management and promote better connection between the LPR release time and financial market operation time, the LPR release time will be adjusted from 9:30 a.m. on the 20th of each month (postponed in case of holidays) to 9:15.

　　According to regulations, LPR quoting banks quote prices to the National Interbank Funding Center based on the open market operating interest rate (mainly referring to the medium-term lending facility MLF interest rate) plus points.

The National Interbank Funding Center calculates the loan market quoted interest rate by taking the arithmetic average after removing the highest and lowest quotes.

LPR quotation expected to remain unchanged

　　Currently, the latest quotes for 1-year LPR and 5-year and above LPR are 3.45% and 4.2% respectively.

　　On January 22, the first LPR quotation in 2024 will be released. With the MLF interest rate unchanged on the 15th, whether the LPR will be lowered has attracted much attention.

　　On January 15, MLF continued to achieve "volume increase and price balance", and the market expected interest rate cut failed.

From a price point of view, the reverse repurchase and MLF winning rates in January were both the same as last month, which means that the probability of LPR remaining unchanged in January is relatively high.

　　Dong Ximiao, chief researcher of China Merchants Union Financial, judged that the LPR is added on the basis of the 1-year MLF. The MLF bidding interest rate has not changed, and the possibility of the LPR changing is very small.

　　Wang Qing, chief macro analyst of Oriental Jincheng, also believes that considering that the MLF operating interest rate is the pricing basis for LPR quotations, and the current net interest margin of commercial banks is under pressure, although commercial banks have recently launched a new round of deposit interest rate cuts, comprehensive considerations Various factors that affect LPR quotations will remain unchanged on January 22.

　　Since 2023, the MLF bidding interest rate has dropped twice, with a cumulative decrease of 25 basis points, leading market interest rates to decline significantly.

　　Pang Ming, chief economist and director of the research department of Jones Lang LaSalle Greater China, analyzed that there is still the possibility of further reductions in LPR with a maturity of more than 5 years.

　　Dong Ximiao believes that in the first quarter, the central bank will still likely lower the policy interest rate by 5 to 10 basis points and the deposit reserve ratio by 0.25 percentage points, further reducing bank capital costs, guiding LPR, especially LPR over 5 years, to moderately decrease, and helping to reduce the financing of business entities. costs, further stimulate the demand for effective financing, and lay the foundation for a good start and sustained recovery of the economy in 2024.

　　(Yicai Duchuan)