The net interest margin of domestic commercial banks hit the lowest point.
A few days ago, data disclosed by the State Administration of Financial Supervision and Administration showed that in the fourth quarter of 2023, the net interest margin of commercial banks fell below 17% to 169%。
As the net interest margin of domestic commercial banks continues to fall, many experts and scholars said that banks should maintain reasonable profits, and small and medium-sized banks are under greater operating pressure in this round of net interest margin narrowing cycle.
The net interest margin of commercial banks fell below 17%
Judging from the data disclosed by the State Administration of Financial Supervision and Administration, commercial banks once again fell below the previous low, to 17% below, 169%, down 0. from the first three quarters of 202304 percentage points. This is the first time in many years that net interest margins have fallen below 18% horizontal line.
This is mainly due to factors such as the decline in the interest rate of new loans, the adjustment of the interest rate of existing housing loans, and the repricing of loans. A banking analyst at a large domestic financial institution told reporters.
In terms of sub-institutions, the net interest margins of city commercial banks and foreign banks both fell to 157% level, the net interest margin of large commercial banks reached 162% level, the net interest margin of joint-stock banks is 175%, the net interest margin of rural commercial banks and private banks reached .39%。
Wang Yifeng, chief analyst of Everbright's financial industry, said that the change in net interest margin in the fourth quarter of last year was affected by the reduction of interest rates on existing mortgage loans, and the proportion of mortgage business of such commercial banks was relatively high.
The net interest margin of rural commercial banks is relatively high, mainly because such banks did not follow up with the reduction of the deposit interest rate of the third ** bank in the fourth quarter of last year. A banking analyst of a large domestic financial institution told reporters that the domestic large, medium and small banks have adopted a "ladder" reduction in deposit interest rates, so that the market can fully digest the impact of deposit interest rate reductions.
However, the reporter noted that affected by the LPR ** cut in February, a number of small and medium-sized banks have recently followed up with the third round of deposit interest rate cuts of large state-owned banks last year.
Net interest margins may also be **.
Net interest margin refers to the ratio of a bank's net interest income to all interest-bearing assets of the bank. As an important indicator of the profitability of commercial banks, it has received extensive attention in the industry.
From the perspective of bank income structure, net interest margin is the revenue embodiment of the bank's main deposit and loan business, accounting for 70% and 90%.
For a long time, the net interest margin of commercial banks hovered above 2%, until the first quarter of 2022, when the overall net interest margin of commercial banks fell below 2% for the first time, and the net interest margin of that year was 191%, and since then, the bank's net interest margin has been declining, falling to 1. in the third quarter of 202373% low, falling to 1. in the fourth quarter of 202369% is a record low.
The continuous narrowing of interest rate spreads will undoubtedly affect the profits of commercial banks in the first place. According to the Implementation Measures for Qualified Prudential Assessment (2023 Revised Edition), the supervision is 18% net interest margin warning line, if a commercial bank's net interest margin is less than 18% will be deducted points in the assessment, 08% (inclusive) to 1The 8% score ranges from 60 points (inclusive) to 100 points; 0.Less than 8% is scored as 0 points.
In the view of many industry insiders, there is still room for further narrowing of net interest margin in 2024 due to factors such as the country's policy call to benefit the real economy, the continuous reduction of LPR, the lower market interest rate, and loan replacement.
Dong Ximiao, chief researcher of Zhaolian and part-time researcher of the Institute of Financial Research of Fudan University, said that in the context of the banking industry's continuous concession of the real economy, the net interest margin of the banking industry may decline.
This means that the net interest margin of commercial banks will be below 1 for a long time8% cordon.
What should be the reasonable range between banks giving profits to the real economy and maintaining a reasonable level of profits?
According to a number of industry insiders, the minimum net interest margin is about 16%~1.8% between.
Net interest margins are now nearing the bottom. Wang Jian, an analyst in the financial industry of Guosen, believes that after calculation, the bottom line of the corresponding reasonable net interest margin of the banking industry is about 169%。
Lin Yingqi, a banking analyst at CICC, said that estimating the long-term nominal GDP growth rate of about 7% implied by China's "2035 target" and the growth rate of banks' assets of more than 7% are estimated to maintain a stable endogenous capital replenishment bank, it is necessary to maintain a long-term ROE of at least 10% and 1The lower limit of net interest margin is around 6%.
CITIC Chief Economist Ming Ming believes that considering that the loosening of global monetary policy this year is a high probability event, there is still the possibility of further policy interest rate cuts in the second quarter.
Small and medium-sized banks cut deposit rates.
Under the current conditions of accelerating interest rate liberalization and the sinking of large banks' business, how should small and medium-sized banks respond to the repeated decline in net interest margins?
Industry insiders believe that small and medium-sized banks should make efforts from both ends of deposits and loans to squeeze pricing, and in addition, they should develop and develop intermediate business, make good use of the advantages of their own deposit and loan customers, and change the single profit model.
The reporter noted that recently, many small and medium-sized banks have followed up to reduce deposit interest rates to protect the "net interest margin", including Bank of Guilin, Bank of Liuzhou, Yushu Rural Commercial Bank, Huadian Rural Commercial Bank, Lingchuan Shentong Village Bank, etc. Among the interest rate reduction products, the interest rate and maturity of various products such as large-amount certificates of deposit, time deposits, and demand deposits are reduced, and the interest rate of five-year deposits is reduced by up to 65 basis points.
Wang Jian, an analyst in the financial industry at Guosen, believes that on the liability side, small and medium-sized banks should control the cost of debt, pay special attention to avoid the vicious competition of high-interest deposits, strictly control the cost of deposits, and reduce deposit interest rates by shortening the deposit period and regulating the scale of structural deposits. On the asset side, small and medium-sized banks should improve their asset operation capabilities and improve the efficiency of capital utilization, especially strengthen their risk pricing capabilities, strengthen the inspection of customers' repayment ability and track their repayment status, and reduce the non-performing rate as much as possible.
Zeng Gang, director of the Shanghai Finance and Development Laboratory, said that the narrowing of the net interest margin of the banking industry is the general trend. Small and medium-sized banks should make efforts at both ends of assets and liabilities at the same time, and on the asset side, they should focus on the local area, be small and scattered, take deeper roots, sink customers, look for projects with higher asset returns, and work hard to improve the return on assets from customers and assets, continuously optimize the asset structure, and stabilize the level of loan yield. On the liability side, it is necessary to appropriately optimize the debt structure, reduce the proportion of fixed deposits, moderately increase the proportion of active liabilities, and increase the proportion of low-cost deposits.
Efforts should also be made to engage in intermediary business. Wang Jian added that it will improve its service capabilities and service quality, increase product innovation, make good use of its own advantages in deposit and loan customers, expand wealth management, asset management, investment banking and other businesses, change the current single profit model, reduce the dependence on simple deposit and loan business, and alleviate the negative impact of the narrowing of net interest margin on the profitability of small and medium-sized banks.