The new round of deposit interest rate cuts exceeded expectations, why choose the end of the year?LPR outlook for next year.
On November 22, large state-owned banks such as Industrial and Commercial Bank of China and Bank of China successively announced a wave of notices on the official ** to reduce deposit interest, which said that from today, the interest rate of three-month fixed deposit and withdrawal, half-year and one-year has been reduced by 10 percentage points, and the benchmark interest rate for one-year is 145%；The interest rate on two-year Treasury bonds was reduced by 20 percentage points from the benchmark rate to 165%；Both the three-year and five-year interest rates fell by 25 percentage points to 195% and 200%。
On December 22, CICC** (Goldman& Co.Lin Yingqi expressed his opinion, saying that the rate cut could be the largest in 2016, because of the unprecedented sharp cut in short-term savings rates. According to CICC**'s calculations, the one-year reserve requirement ratio for fixed deposits will be reduced to about 9 basis points from 9 basis points in September 2023, 3 basis points in 2023, and 10 basis points and 12 basis points in 2022.
As the reduction in deposit rates becomes clearer, people are beginning to pay close attention to what the borrowing rate will be for the next year.
On December 21, the head of the fixed income department of a leading company in Beijing told this reporter that the interest rate cut is conducive to reducing the net profit pressure of some banks and providing more options for banks to benefit the real economy, but considering the reduction of deposit interest rates and the net interest margin of banks, it is expected that the follow-up LPR interest rate reduction will also need to be coordinated with tools such as RRR cuts.
Ming Ming, chief analyst of CITIC, said that in view of the cumulative effects of previous interest rate cuts and MLF operations, coupled with the high probability of LPR cuts, MLF interest rate cuts are needed to guide the follow-up.
Why lower interest rates at the end of the year?
At noon on December 21, the Industrial and Commercial Bank of China first announced the news of the interest rate cut, and all the bankers interviewed in this newspaper were slightly surprised by this, and the industry also widely recognized that the interest rate cut was an adjustment that exceeded expectations.
Zhongjin Lin Yingqi said that the strength and timing of this interest rate cut are better than expected by the outside world. However, before the "good start", the debt burden of banks can be reduced by lowering the reserve requirement ratio, thereby reducing the spread between long-term and government bonds, thereby mitigating the conflict between banks' return on assets and debt costs in a sense.
Liang Fengjie, a banking analyst at Zheshang**, also said that the reason for choosing this point in time is largely due to the fact that 24Q1 this year, especially small and medium-sized enterprises, has entered a very critical time node, that is, the first month of this year, that is, the first month. Therefore, the effect of lowering the savings rate in advance on economic growth can be realized more quickly.
The Financial United Daily reporter found that on the evening of December 21, the official website of ** bank announced the news of an expert seminar on economic and financial issues presided over by Pan Gongsheng on December 18, Pan Gongsheng said that everyone's views are very meaningful. At present, the exchange rate of the renminbi is generally in a relatively stable and balanced state. Next, it is necessary to keep the scale and amount of social financing in line with the requirements of economic development and the price level, so that credit growth is reasonable, the pace is stable, and the structure is optimized, so as to create favorable monetary and financial conditions for the continued recovery and development of the economy.
How much interest can the banking system save?
In recent years, the fixation of savings has increased the cost of bank debt.
As of the end of November, all RMB deposits in China totaled 2830 trillion, an increase of 10 over the same period last year3%, 25 more than at the beginning of the year5 trillion;Among households and non-financial enterprises, the rate of irregular savings is 533%, up 24 percentage points.
According to CITIC, in the third quarter of this year, the interest-bearing debt-to-expense ratio of China's major banks reached 209%, compared to 2023Q206% is 3 percentage points higher.
Statistics show that in.
In April, June, September, October and December, the central bank has cut interest rates five times, and after June, it has not cut interest rates, only fixed deposits.
Source: Founder Company.
Lin Yingqi, an analyst at CICC**, expressed his opinion on December 22 that a 15 basis point interest rate cut based on about 150 trillion yuan of savings deposits could save 225 billion yuan in interest expenses a year, which is roughly the same as the impact of the decline in interest rates on existing housing loans.
However, whether interest rate spreads will stabilize in the future depends on whether there is an improving trend, the recovery of loan demand, the extent of the LPR cut, and the progress of urban investment bonds.
What is the magnitude of the simultaneous reduction of LPR?
CICC Lin Yingqi said that this rate cut may be the largest since 2016, because the short-term savings rate has been cut sharply and unprecedentedly. According to CICC**'s calculations, the one-year reserve requirement ratio for fixed deposits has decreased by 15 basis points, down 9 percentage points from September 2023, 3 percentage points from 6 percentage points in 2023, and 10 percentage points from 6 percentage points in 2022.
After such a big adjustment, will the borrowing of the financial system also decline?
CITIC Mingming believes that after the LPR downgrade, the probability of long-term LPR reduction will increase, but the scope of the reduction is likely to be relatively small. In the long run, the strength of cost reduction and credit easing tools still exists, which is consistent with the central bank's monetary policy theme of "flexible, moderate, precise and effective", and the central bank will continue to reduce the LPR** through the reduction of MLF interest rates for a period of time in the future.
Lin Yingqi said that the LPR rate will not be canceled by 10 basis points earlier next year, but this will have a greater impact on the repricing of banks, which will be compatible with the effect of the decline in bank interest rates, so as to prevent the spread pressure on banks caused by the decline in LPR interest rates at the end of the year.