The bank, still can't bear it!

Xiaobai reads finance and economics

2024-06-18 21:38Published in Guangdong

First, the banks are having a hard time

The banks have not had a good time lately. Stock prices have been correcting, and the continued decline in mortgage rates has made it even more difficult for banks.

Recently, the central bank said that most cities across the country have lifted the lower limit of mortgage interest rates. Although Beijing, Shanghai and Shenzhen have not abolished the lower limit of mortgage interest rates, they are generally lower than the LPR.

As the best asset of the bank, the first-tier cities are the main contributors to the bank's housing loan, and the reduction of the mortgage interest rate has a huge impact on the bank's profit.

No, more and more banks can't bear it!

According to the Financial Times, in the past month, small and medium-sized banks in Guangdong, Guangxi, Henan, Hubei, Guizhou, Harbin, Shanxi, Shenzhen and other places have adjusted the listed interest rates on deposits, with a reduction of up to 60 basis points. At present, fixed deposits with interest rates above 3% are hard to find.

It is understandable and expected that banks have lowered their deposit rates, because if the mortgage interest rate is lowered, the net interest margin of banks will be further compressed. Both regulators and banks themselves are extremely concerned about net interest margins, and for banks, net interest margins that are too low means that they will have to live even harder.

As of the end of 2023, the net interest margin of commercial banks, an important indicator, fell to 1.69%, falling below the 1.7% mark for the first time. It has broken through the threshold of 1.8% of the agreed net interest margin of the self-regulatory mechanism in the Implementation Measures for Qualified Prudential Assessment (2023 Revision).

Therefore, banks' net interest margins need to be stable.    

On May 23, the National Development and Reform Commission, the People's Bank of China and other four departments issued a notice mentioning that they will continue to play an important role in the reform of the loan prime rate (LPR) and the market-oriented adjustment mechanism of the deposit interest rate, and promote the steady and moderate decline of social comprehensive financing costs on the basis of maintaining the basic stability of the net interest margin of commercial banks.

In the context of the continuous decline in mortgage interest rates, it will be indispensable to maintain the stability of banks' net interest margins and reduce deposit rates.

A recent article in the Securities Times mentioned that for banks, a new round of reduction in deposit interest rates will also usher in a suitable window period.

Second, the deposit interest rate has fallen, and the yield of wealth management has also begun to fall

According to the Financial Associated Press, recently, a number of bank wealth management products have lowered their performance benchmarks, and some products have been adjusted by up to 130BP. For example, Minsheng Wealth Management Guizhu Hui Win Tianli Fixed Income Enhancement One-year Fixed Opening No. 9 wealth management product has recently been lowered, with the performance benchmark before the whole being 3.7%-5.3% and 3.1%-4.0% after adjustment.

The performance benchmark is the bank's estimated income, and its downward adjustment means that the bank's expected rate of return on fixed-income wealth management will decline. The downward adjustment of the performance benchmark is related to the decline in deposit rates, because a large part of the underlying assets of bank wealth management are deposits or bonds.

Recently, the news of the bank's early termination of wealth management products has also been on the hot search, which shows that the bank really can't roar, and the original expected higher rate of return cannot be realized, and now it can only withdraw. The reason behind this is, of course, that interest rates are falling, and it is a huge pressure for banks to maintain high interest rate products for a long time.

In addition, according to the Shanghai Securities News, in order to meet the company's risk management and control requirements, some insurance companies will officially stop selling 3.0% increased whole life insurance on June 30, and will list increased whole life insurance with a predetermined interest rate of 2.75% on July 1, and the new product has been successfully reported.

For the insurance industry, every scheduled rate cut is a top priority for the industry. In recent years, the scheduled interest rate has been lowered continuously, from 4.025% to 3.5%, last year to 3%, and now it is expected to fall again to 2.75%.    

The main reason is that market interest rates are falling, especially deposit rates.

It can be seen that the reduction of market interest rates and deposit interest rates will be a long-term trend in the future, and the reduction of deposit interest rates will also mean that the yield of fixed income wealth management will also continue to decline.    

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