China-Singapore Jingwei client, April 4th (Wei Wei) There must be a major event every Friday. On April 3, the central bank released two heavy news. The first is the targeted reduction of the deposit reserve ratio for small and medium-sized banks by 1 percentage point. Long-term capital is about 400 billion yuan; second is to reduce the interest rate of excess reserves of financial institutions in the central bank from 0.72% to 0.35% since April 7

In less than 20 days, the central bank once again announced a targeted RRR cut, and restarted to reduce the excess deposit reserve interest rate after an interval of 12 years. What is the deep meaning of the central bank? What impact will it have on ordinary people's money bags?

Selecting small and medium-sized banks for the third time in the year

It is reported that this RRR cut is the third reduction in the year. On January 1 and March 16 of this year, the central bank conducted a comprehensive RRR cut and an inclusive financial PR cut, respectively. These two RRR cuts released 800 billion yuan and 550 billion yuan respectively.

Only half a month later, the central bank once again lowered the target for small and medium-sized banks. The specific content is to lower the deposit reserve ratio by 1 percentage point for rural credit cooperatives, rural commercial banks, rural cooperative banks, rural banks, and urban commercial banks operating only in provincial administrative regions, on April 15 and May 15. The implementation of the daily split has been carried out twice, with a reduction of 0.5 percentage points each time, and a total of about 400 billion yuan of long-term funds have been released. According to the central bank, the deposit reserve ratio of more than 4,000 small and medium-sized deposit-taking financial institutions fell to 6% after the RRR cut.

On March 31, the executive meeting of the State Council decided to further strengthen inclusive financial support measures for small and medium-sized enterprises, including the further implementation of targeted RRR cuts for small and medium-sized banks, guiding all funds that small and medium-sized banks will receive, with preferential interest rates Wide range of small, medium and micro enterprises provide loans.

"This RRR cut is the third reduction this year. Such a high frequency of RRR cuts not only reflects the gradual force of counter-cyclical regulation, but also shows the urgency of epidemic prevention and control and economic recovery and development." China Minsheng Bank Chief Researcher Wen Bin said to the Sino-Singapore Jingwei client.

Why did you choose small and medium-sized banks this time? Wen Bin explained that on the one hand, due to the large number of small and medium-sized banks, the number of households accounts for 99% of the banking system, and they are rooted at the grassroots level, are inherently inclusive, and are an unavailable force serving grassroots small and medium-sized enterprises; on the other hand, In the targeted RRR cut on March 16, both large banks and joint-stock banks received a greater degree of reserve ratio discount, so this targeted RRR cut is aimed at small and medium-sized banks. The release of long-term funds through this RRR cut helps support small and medium-sized banks to better focus on their main businesses, increase credit supply to small and medium-sized enterprises, reduce financing costs, and achieve precise relief.

Li Qilin, the chief economist and director of the research institute of Guangdong Development Securities, analyzed that in 2018-2019, the supervision continued to strengthen the importance of inclusive finance, and after the requirements for inclusive financial loans to banking financial institutions, large and small banks were in Strengthen inclusive financial services. But big banks have cheaper debt and are more willing to invest, which can give lower interest rates to small and micro enterprises. Compared with this, the competitiveness of small banks is obviously weaker, and it is more difficult to achieve regulatory targets. The current targeted downgrade, coupled with the re-discounting of more than one trillion yuan before re-discounting, can provide small and medium-sized banks with enough cheap debt to provide small and medium-sized banks with more bargaining power for small and micro enterprises and other inclusive customers, and better compete with large banks.

However, Li Qilin further expressed his concern about the risk of lending. He believes that for some small banks in areas with less developed economies and fewer high-quality small and micro-enterprise customers, they may not even have lower prices and more cheap debt. Willing to expand risk exposure and lend to high-risk enterprises. But the RRR cut at least attenuated the cost of debt of these banks, protected their interest margins and profits, and made them better able to cope with the risks caused by the deterioration of asset quality in a sluggish economic environment.

After 12 years, the excess reserve interest rate will be lowered again

What is the excess reserve interest rate? The central bank explained that excess reserve is the money that depository financial institutions voluntarily deposit in the central bank after paying up the statutory reserve. It is independently controlled by the bank and can be used for liquidation and cash withdrawal at any time. The People's Bank pays interest on excess reserves, and the interest rate is the excess reserve interest rate.

In fact, the last reduction in the excess reserve interest rate still dates back to 2008, when the interest rate was lowered from 0.99% to 0.72%, and no adjustment has been made since then. The central bank said that the reduction of the excess reserve interest rate from 0.72% to 0.35% this time can promote banks to improve the efficiency of capital use and promote banks to better serve the real economy, especially small and medium-sized enterprises.

"This tool is mainly to force commercial banks to increase credit supply. The excess reserve interest rate is the rate of return that banks get when they put their deposits in the central bank. Now the decline in interest rates actually encourages banks not to put all their money in the central bank. Take out loans to support the real economy. The ECB ’s excess reserve interest rate is negative, which means that banks put money in the central bank and charge fees, in fact, to force banks to lend. "Deputy Institute of CITIC Securities Research Institute Chang Mingming analyzed the Sino-Singapore latitude and longitude client.

Wang Qing, chief macro analyst of Dongfang Jincheng, explained that it is generally believed that the excess deposit reserve interest rate (also known as the "excess reserve rate") is the lower limit of China's interest rate corridor. Considering that the 7-day reverse repurchase rate and MLF interest rate in the previous policy interest rate system have been adjusted 2-3 times, the reduction of the overstorage interest rate to a certain extent reflects the linkage of the policy interest rate system and helps maintain The interest rate corridor runs orderly.

Wang Qing also believes that the central bank's sharp reduction in the interest rate of over-reserves is actually urging commercial banks to increase their investment in corporate credit, and not to hoard the liquidity released by the central bank in their own hands or accumulate in the currency market. The average value of DR007 has been significantly lower than the central bank's 7-day reverse repo rate recently. This means that under the current situation, the central bank hopes to see the renminbi credit growth accelerate further, especially in terms of the growth rate of loans to small, medium and micro enterprises. It is expected that the growth of RMB loans in the financial data in the coming months is expected to accelerate.

Financial yields may be lower

Will the targeted RRR cut and the reduction in the excess deposit reserve interest rate affect the bank's wealth management yield?

"As the investment rate of return of the entire banking system declines, in the long run in the future, the rate of return on financial management will drop significantly." Mingming said.

Yin Yanmin, an analyst at Rong 360 Big Data Research Institute, analyzed the Sino-Singapore Jingwei client that monetary policy continues to be loose and funds are continuously released to the market. For fixed-income investment products, the overall income level will further decline. Future banking wealth management products, Monetary fund returns will continue to decline, and high-yield, low-risk fixed income products will be fewer and fewer.

She recommends that investors with lower risk tolerance, if liquidity requirements are low, try to choose mid- and long-term wealth management products, and lock in a relatively high rate of return in advance.

Limited impact on stock and property markets

According to wind statistics, from November 2011 to the present, the central bank has had 20 RRR cuts (including targeted RRR cuts). From the point of view of the rise and fall of the stock market the next day, the Shanghai Composite Index has fallen 9 times and 11 rose. The impact of the A-share market is mixed.

Qian Delong, the chief economist of Qianhai Open Source Fund, told reporters at Sino-Singapore Jingwei that the valuation of the A-share market is now at the historical bottom. The price-earnings ratio of SSE 50 is only 9 times. So the market does not have the conditions for a sharp decline.

He believes that if the A-share market is to truly strengthen, it will need to wait for the inflection point of the overseas epidemic situation and the number of diagnoses in the United States and Japan to trend downward before it will really usher in the opportunity of a substantial rebound. Structural quotes are dominant. Investors are advised to look for opportunities in the three main directions of consumption, brokerage and technology, especially in some consumer industries that were relatively affected by the epidemic in the first quarter. Now they are gradually recovering and consumer white horse stocks are also ushering in a new round of opportunities. Investors can actively layout.

In addition, many people are concerned about whether the RRR cut will affect the property market. In this regard, Zhang Dawei, chief analyst of Zhongyuan Real Estate, pointed out that the RRR cut is not for real estate, but to reduce corporate financing costs. The Central Economic Work Conference also proposed that a sound monetary policy should be flexible and appropriate, maintain reasonable and sufficient liquidity, and increase the scale of monetary credit and social financing in line with economic development and reduce social financing costs. Under the clear requirements of “no housing and no speculation” and “not using real estate as a short-term stimulus to the economy”, funds released by RRR cuts are strictly controlled to enter the real estate sector.

Zhang Dawei believes that although the RRR cut for small and medium-sized banks has little direct impact on real estate, historically, as long as the RRR cut is good for real estate, the RRR cut can ease the financial pressure of real estate companies, and it can also be used for home buyers' mortgages. Get relatively stable credit prices.

April MLF interest rate and LPR quotes are expected to go down

So what will happen to monetary policy in the future? Many industry experts believe that China is at a critical stage of resuming production and production, and steady growth will become the core task of economic development throughout the year. In the future, monetary policy should increase the intensity of counter-cyclical adjustment, unblock the transmission channels of monetary policy, and promote the gradual decline in the actual financing cost of enterprises.

Dong Ximiao, a special researcher of the National Finance and Development Laboratory, told the Sino-Singapore Jingwei client that in the early stage, the banking industry generally cut interest rates for the prevention and control of outbreaks and the resumption of production. Under the circumstances that the profit growth of banks is affected, the benchmark interest rate of deposits can also be lowered in a timely and appropriate manner, to further reduce the cost of bank liabilities and enhance the initiative and sustainability of banks to improve their services. For small and medium-sized banks, it is more important to help broaden the debt channel, enrich the source of debt, and allow more flexible interest rate fluctuations.

At the same time, we should further reform and improve the LPR related mechanism and deepen the market-oriented reform of loan interest rates. At present, we should pay close attention to promoting the conversion of the stock floating rate loan pricing benchmark, and unblock the monetary policy transmission channels in a reformed manner to promote the gradual decline in the actual financing costs of enterprises.

Wen Bin believes that in the next stage, it is still necessary to continue to increase counter-cyclical adjustment efforts and reduce the cost of social financing is the core work of monetary policy. It is expected that the central bank will lower the MLF interest rate before the LPR is announced in April and guide LPR down. In addition, the upcoming re-discounting of 1 trillion yuan, 300 billion yuan of small and micro financial bonds, and more than 1 trillion yuan of corporate credit bonds from the previous year will help broaden the low-cost financing channels for small and medium-sized enterprises. .

Wang Qing pointed out that the MLF interest rate and LPR quotations in April are expected to resume downward, and the counter-cyclical adjustment of monetary policy has increased significantly. Considering that the central bank's 7-day reverse repurchase rate has been reduced by 20 basis points on March 30, it is expected that this month's routine MLF operation tender rate will also be reduced by the same amount. This will drive the one-year LPR quotation on April 20 to resume downward. It is estimated that the downward range will also be 20 basis points, and the five-year LPR quotation may also decline by 10 basis points.

He analyzed that the decline in LPR quotations will drive bank loan interest rates to fall more drastically, and from the perspective of bank funding sources, lower money market interest rates cannot compensate banks for losses in net interest margins. Taking into account factors such as macroeconomic cost reduction, inflation control, and risk prevention, there may be a slight downward adjustment in the benchmark interest rate of deposits of about 0.25 percentage points, and it is more likely that the CPI will significantly lag behind in the second half of the year. This means that for a period of time to come, in order to effectively reduce the cost of corporate financing, banks will make a moderate profit to the real economy. (Zhongxin Jingwei APP)

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