Since 2023, the listed interest rates of RMB deposits have been falling all the way, with large state-owned banks acting as the vanguard and taking the lead in lowering deposit interest rates, followed closely by small and medium-sized banks.

Generally speaking, deposit interest rates have experienced three rounds of substantial reductions in 2023. The 3-year and 5-year time deposit interest rates have both declined. The 3-year time deposit interest rates of major state-owned banks have dropped to about 2%.

What impact will this have on the bank financial management market?

How should investors allocate assets?

"Savings for moving" may be strengthened

  With the reduction of deposit interest rates, the most direct impact on users who are accustomed to deposits for financial management is reduced income. It is not ruled out that some deposits will flow back to the bank financial management market, and the "savings relocation" phenomenon may be intensified.

  "In a low interest rate environment, compared with deposits, financial management has gained more appeal due to its robustness and relatively high returns. As deposit interest rates fall, investors will pay more attention to long-term wealth management and asset allocation in order to To achieve the goal of outperforming inflation and stabilizing returns." Li Zhenyu, a researcher at Puyi Standard, said that bank financial management can often provide diversified investment options, make personalized product recommendations based on users' personal risk preferences, and provide professional risk management and consultation services to achieve long-term and stable wealth management.

The reduction in bank deposit interest rates may be beneficial to bank financial management.

  Puyi Standard data shows that in December 2023, a total of 2,906 new financial products were launched in the market, of which 1,528 were launched by financial management companies, accounting for more than 50%.

At present, six major state-owned banks have established wealth management companies, and 12 national joint-stock banks have basically established wealth management companies.

In addition, many city commercial banks and some rural commercial banks are also actively deploying and opening financial management companies.

  Recently, Zheshang Bank issued an announcement stating that the bank received the "Approval from the State Financial Supervision and Administration Administration on the Preparation for the Establishment of Zheshang Financial Management Co., Ltd." on December 29, 2023.

According to the approval, Zheshang Bank was approved to establish Zheyin Financial Management Co., Ltd., which will be the 32nd financial management company of my country's bank financial management subsidiary.

  The main role of financial management companies in the financial management market has become increasingly prominent, and the "seesaw effect" between bank financial management and deposit interest rates has gradually become more prominent.

At the end of 2023, major state-owned banks such as ICBC, Agricultural Bank of China, Bank of China, and China Construction Bank lowered their deposit listing interest rates for the third time in 2023.

In the context of continued decline in deposit interest rates, some banks have launched exclusive financial products with year-end bonuses for marketing to enhance user appeal.

In addition, the yield rate of some cash management financial products has increased.

Experts said that this is due to the impact of liquidity factors such as the New Year's Eve, and bank financial management income has surged in the short term.

However, as interest rates fall in the future, yields will be affected to a certain extent.

Advantages of bank financial management emerge

  Judging from the financial management agency sales channels in 2023, the number of cooperative agency sales agencies of financial management companies is gradually increasing, and their financial management products are provided by parent companies.

  The proportion of agency sales further decreased.

Wealth management companies are constantly expanding their agency sales channels for other banks, gradually reducing their reliance on parent banks, and enhancing their competitiveness.

  Ming Ming, chief economist of CITIC Securities, said that stable economic growth still requires continued easing of monetary policy.

With the reduction of deposit interest rates, banks' net interest margins will face greater pressure. In order to cooperate with the monetary policy of the People's Bank of China, several rounds of deposit interest rate adjustments may still be promoted in 2024. By then, the advantages of financial management income will be more prominent, and some high-quality cash financial products The yield may outperform the 3-year fixed deposit interest rate.

At present, the net loss rate is also at a relatively low level in history, and there may be no further wave of redemptions. In the first half of 2024, the scale of financial management will grow slightly and steadily, and is expected to reach about 28 trillion yuan.

“Currently, many major banks have put on their shelves the products of financial management companies from other banks, forcing our own financial management companies to launch more competitive products,” Mingming said.

  It is worth noting that in the context of a reduction in deposit interest rates, if financial management companies excessively display their past earnings to investors, this will not fully reflect the risk-return characteristics of financial management products.

According to the China Banking Association's "Code of Conduct for the Presentation of Past Performance of Wealth Management Products", displaying the past performance of wealth management products should help fully disclose information and risks to investors, truly and accurately reflect the investment management level of the manager, and ensure that investors are informed rights to enhance investors’ judgment on the nature and characteristics of products.

  Experts said that one-sided and non-standard display of the past performance of financial management products can easily cause investors to misjudge their investments. Financial management companies should fully disclose information and reveal risks so that investors can better understand the nature, characteristics and causes of past performance of the products.

  According to the "China Banking Industry Financial Management Market Semi-Annual Report (2023 First)" released by the Banking Industry Financial Management Registration and Custody Center, in the process of promoting high-quality economic development, financial management companies have identified their functional positioning, focused on leveraging their advantages and expertise, and achieved differentiated development path, build its own core investment research capabilities and investment strategies, practice long-term value investment, and meet the market’s multi-preference and multi-level funding needs.

As a rising star, bank financial management is injecting fresh blood into the financial management market. At the same time, problems such as insufficient investment research capabilities and relatively weak core business competitiveness have always plagued its development. How to lead and break through in the asset management industry in the future is still an important issue at present.

  Some insiders said that bank financial management has achieved a comprehensive transformation from "deposit-like" products with guaranteed principal and interest to market-oriented net value products with floating income. The unique channel advantages have laid the foundation for bank financial management to sink more deeply, and also determined the future of bank financial management. Bank financial management investors have the characteristics of low risk preference and pursuit of “certainty”.

Low-risk financial management is in great demand

  According to research and calculations by the Mingming team of CITIC Securities, as of the end of 2023, the scale of bank financial management will be approximately 26.96 trillion yuan, a year-on-year decrease of only about 2.5%. It can be said that bank financial management has withstood a major impact in 2023.

At the same time, this also makes investors' investment strategies become more conservative.

  The relevant person in charge of Hangyin Financial Management said that against the background of the comprehensive transformation of bank financial management from guaranteed principal and interest to net-value products with market-oriented floating returns, residents' demand for long-term, low-risk financial management has always existed.

How to help investors cope with the continuous decline in deposit interest rates and meet the needs of low-risk financial management, bank financial management must be investor-centered and accelerate the development of investment research capabilities.

  Recently, reporters found that many small and medium-sized banks have raised deposit interest rates. Some large-denomination certificates of deposit have a three-year deposit interest rate as high as 3.55%. Compared with large state-owned banks, the deposit interest rate spread is about 1.6%, and the five-year interest rate spread is as high as 1.95%.

Industry insiders said that some small and medium-sized banks have recently raised deposit interest rates in the hope of increasing market competitiveness. Although short-term interest rates have increased, deposit interest rates may still fall in the future.

It is suggested that investors may wish to seize the opportunity of the short-term rise in interest rates on deposit financial products and make good financial management arrangements.

  Wang Yifeng, chief analyst of the financial industry at Everbright Securities, said that under the expectation that the economy will gradually bottom out and stabilize, the improvement of residents' risk appetite may be a relatively slow process, and financial management should still focus on low-volatility and stable products.

  As financial management companies compete to deploy low-volatility and stable product lines, product homogeneity will become more prominent. Coupled with the lack of relative attractiveness of product yields, competition among financial management institutions may further intensify.

“From the asset side, wealth management companies have a wide range of investable asset types in the asset management industry. They can fully integrate high-quality target resources, strive for optimal multi-asset allocation and synergistic benefits, and continuously increase investor returns. In addition, Bank financial management institutions should be based on the actual needs of investors, closely follow the national macro policy guidance, build a professional investment research system based on product features and their own resource endowments, and create differentiated competitive tools with bank financial management characteristics." Li Zhenyu said.

  Wang Baohui