According to reports, a number of major state-owned banks will be released on December 22Lowering the interest rate on depositsThis is the third time this year that state-owned banks have collectively lowered the interest rate on deposits, after June and September, and it is also the largest one.
Source**: ICBC APP
Why is the deposit rate lowered?
Will the lending rate also be lowered?
What are the implications?
We've put together some useful information for your reference:
1. Why is the deposit interest rate lowered?
1. Enhance banks' ability to resist risks, and outflow space for lowering loan interest rates
In recent years, the savings tendency of enterprises and households has continued to strengthen, which has intensified the pressure on the debt side of banks.
At the same time, in order to support the recovery of the real economy, measures such as lowering LPR and lending rates have further lowered the net interest margin of banks, and according to the third quarter report of this year, the net interest margin of the banking industry has fallen to 173%, a record low.
Banks' net interest margins fell to historic lows.
Source**: Shanxi**.
The reduction of fixed deposit interest rates is expected to effectively reduce the cost of banks' liabilities, thereby improving net interest margins and leaving room for further debt reduction and reduction of lending rates to residents and enterprises.
2. It is expected to promote household consumption and investment
Wind data shows that the balance of household fixed deposits in November this year increased by 19% year-on-year9%, which continues to be at the highest level in nearly a decade.
Source**: Soochow**.
The reduction in the deposit rate is expected to shift residents' savings to consumption and other financial assets. Ultimately, though, the key lies in restoring residents' confidence, which will not happen overnight.
Second, is the interest rate cut a "prelude" to the central bank's interest rate cut?
Let's jump to the conclusion first: the probability may be relatively large.
In the first two years of this year, there were both deposit rate cuts and interest rate cutsClose temporal tie:
On June 8, 2023, state-owned banks lowered the listed interest rate on deposits, and only 5 days later, the central bank lowered the OMO interest rate, starting a new round of interest rate cuts to strengthen countercyclical adjustment
In mid-August 2023, the central bank cut interest rates for the second time this year, and only half a month later, on September 4, state-owned banks "made up" the listed interest rates on deposits.
At present, the foundation of domestic economic recovery is not yet solid, coupled with the Fed's pivot and the easing of exchange rate pressure, the central bank may have opened up room for another interest rate cut.
3. What is the impact on the bond market?
For the bond market orGood.
On the one hand, with the new round of deposit rate cuts, the monetary policy space is expected to be opened, and the policy interest rates such as MLF and LPR are also expected to be lowered in the future, driving interest rates downward.
On the other hand, the reduction of deposit interest rates is expected to further promote the "move" of deposits to wealth management, while the decline in the cost of bank liabilities is also expected to increase the allocation of bonds and push interest rates down.
Fourth, what is the impact on **?
Judging from the performance of the previous deposit rate cuts in the past month in history, whether it is a major A-share index or various industry sectorsThe performance is good.
1 month after the reduction of the deposit rate.
The cumulative rise and fall of major indexes, styles, and Shenwan first-class industries (%)
Source**: Wind, Shanxi**.
Recently, A-shares have continued to decline, and valuations have returned to historically low areas.
The data on the difference between stock and bond returns shows that no matter from the perspective of the past 3 years, the past 5 years, the past 10 years and other time dimensions, the investment cost performance of A-shares may have been at a high level.
Data**: Mini Program A-share thermometer.
In this context, easy monetary operations such as deposit rate cuts and interest rate cuts are expected to improve market sentiment and liquidity, and help A-shares get out of the bottom as soon as possible.