Multiple banks run out of stock for medium and long-term large deposit certificates
2024-06-25
Recently, multiple banks have taken steps to adjust the issuance of medium - and long-term large certificate of deposit products. After the suspension of the sale of three-year and five-year certificates of deposit, some banks have found it difficult to find certificates of deposit with a maturity of six months or more. In addition to reducing new issuance quotas, many banks have also lowered the interest rates on large deposit certificates, and their three-year and five-year interest rates have also dropped from the previous "3" to the current "2". Tian Lihui, Dean of the Financial Development Research Institute of Nankai University, told Securities Daily that the tightening of the issuance of large deposit certificates is due to the downward market interest rates and the need for bank fund cost management. The changes in macroeconomic environment and monetary policy have led to an overall decline in market interest rates, and banks have adjusted the issuance interest rates for large certificates of deposit accordingly. Meanwhile, banks face pressure from funding costs and are unwilling to absorb long-term deposits at higher costs. State owned and joint-stock banks are tightening their issuance of large certificates of deposit, both in terms of quantity and interest rates, as the interest rates on large certificates of deposit decrease. In addition to the mainstream three-year certificates of deposit experiencing stockouts and interest rate cuts, some banks have also suspended the sale of certificates of deposit for six months or more. The Securities Daily reporter found that there are no three-year or five-year large deposit certificates available in multiple bank apps, including China Construction Bank and China Merchants Bank. According to the China Merchants Bank App, there are only products with a minimum deposit period of two years for large certificates of deposit starting from 200000 yuan. However, in the "Transfer Zone", you can see the figure of three-year large deposit certificates. Although some banks still provide three-year certificates of deposit, some banks have restrictions on the target audience and only issue them to new customers. According to the Zhejiang Commercial Bank App, a three-year large deposit certificate with a minimum deposit of 200000 yuan is specifically marked as "exclusive to new customers", with an interest rate of 2.6%. "Our three-year large deposit certificate is only available for new customers, and this product was launched on June 20th at midnight," a customer manager at Zhejiang Commercial Bank told reporters. Minsheng Bank has suspended the sale of large deposit certificates with a maturity of six months or more. The reporter saw on the Minsheng Bank app that currently only large certificates of deposit with one and three month maturities are available for sale. The reporter did not see any two-year or three-year certificates of deposit on the Beijing Bank App for sale. Only one month, three months, six months, and one year were available, with interest rates of 1.8%, 1.8%, 2%, and 2.1%, respectively. The minimum deposit amount was 200000 yuan. From the perspective of large certificates of deposit sold by various banks, the interest rate advantage is not significant. The reporter learned that currently, the interest rates for one-year and two-year large deposit certificates of state-owned banks are between 1% and 2%, and the interest rates for three-year large deposit certificates are around 2.35%. According to the Industrial and Commercial Bank of China App, the interest rates for three-year large deposit certificates with a minimum deposit of 200000 yuan and 1 million yuan are both 2.35%, and the limit shows as sold out. According to data monitored by Rong360 Digital Technology Research Institute, in May 2024, the number of large deposit certificates issued was 407, a decrease of 5.35% month on month and 16.94% year-on-year. In addition, the number of three-year large certificate of deposit issuances is showing a downward trend, and the annual interest rates in the market for large certificates of deposit with different maturities are generally below 3%. The mainstream three-year large certificate of deposit interest rates are showing a downward trend. Lou Feipeng, a researcher at China Postal Savings Bank, told Securities Daily that the net interest margin of the banking industry is currently at a low level and there is still downward pressure. It is necessary to comprehensively consider both asset and liability sides and take more measures to stabilize the net interest margin by reducing debt costs. The interest rate on large certificates of deposit is relatively high, so banks stabilize their debt costs by reducing or removing long-term large certificates of deposit, lowering the interest rate on newly issued large certificates of deposit, and stabilizing the net interest margin to achieve sustainable commercial development and better serve the real economy. Compared to state-owned and joint-stock banks, local small and medium-sized banks are still actively promoting the issuance of large certificates of deposit. Not only is the amount sufficient, but the interest rates on the issued large certificates of deposit are relatively high. Some rural commercial banks have interest rates exceeding 3%. According to an information released by Guangxi Tengxian Rural Credit Cooperative Union regarding large deposit certificates, the eighth issue of large deposit certificates issued by the rural credit cooperative between June 1 and June 30, 2024 has a three-year issuance interest rate of 3.25%, with a minimum deposit of 200000 yuan. According to the WeChat official account of Shanghai Branch of Bank of Nanjing, the interest rates of one-year and two-year large deposit receipts issued by the bank are 2.1% and 2.32% respectively. Tian Lihui believes that the reason why small and medium-sized banks actively issue large certificates of deposit with high interest rates is related to their funding needs, market competition, and risk premiums. Many small and medium-sized banks face a larger funding gap, therefore they need to raise funds by issuing large certificates of deposit. Moreover, in order to compete with large banks, small banks with weaker brands and reputations need to provide more attractive products. In addition, compared to large banks, small and medium-sized banks may be considered to have relatively higher risks and therefore need to provide higher interest rates as a risk premium. "Lowering deposit interest rates and lowering high cost liabilities have become a trend." Ai Yawen, an analyst at Rong360 Digital Technology Research Institute, believes that currently, the interest rates for three-year and five-year fixed deposits have shown an inverted trend. It is expected that deposit rates will continue to experience multiple rounds of adjustments in the future to reduce deposit costs and ease the pressure on banks to narrow their net interest margin. Lou Feipeng said that when the interest rate of large deposit receipts is reduced or "out of stock", investors can stabilize their income by purchasing bank financial products or treasury bond. Investors with high risk appetite and some investment experience can also try to buy funds. However, overall, investors need to adjust their investment return expectations based on changes in interest rate trends. (Lai Xin She)
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