Cut interest rates! The universe is out of hand.

China Fund reported to Amman

Really cut interest rates!

On the afternoon of December 21st, ICBC’s App posted the Notes on Adjusting the Interest Rate of RMB Savings Deposits, and lowered the deposit listing interest rate from December 22nd, 2023, mainly involving three-month, six-month, one-year, two-year, three-year, five-year time deposits and large deposit certificates.

Among them, the listed interest rates of call deposits are lowered by 0.2 percentage points, the listed interest rates of lump-sum deposit, lump-sum deposit and withdrawal, and deposit-principal withdrawal are lowered by 0.1 percentage points, the listed interest rates of three-month, six-month and one-year time deposits are lowered by 0.1 percentage points, the listed interest rates of two-year time deposits are lowered by 0.2 percentage points, and the listed interest rates of three-year and five-year time deposits are lowered by 0.25 percentage points.

ICBC said that in addition to adjusting the deposit listing interest rate, it also optimized the best interest rate level of call deposits and time deposits (including large deposit certificates) to reflect the changes in the market interest rate situation.

Referring to the practice of adjusting deposit interest rates in June and September this year, major commercial banks all chose the same day to take collective action, and tomorrow (December 22), major commercial banks are expected to reduce deposit interest rates simultaneously again.

It is worth noting that this is the third time this year to adjust the deposit interest rate.

The industry believes that "the current net interest margin of banks is under great pressure. According to the data of the General Administration of Financial Supervision, the net interest margin of commercial banks at the end of the third quarter of 2023 was 1.73%, the lowest since 2010. Next, the financial policy will continue to exert its strength to further rationally benefit the real economy. Banks will fully tap the dividend of market-oriented reform of deposit interest rates, reasonably reduce deposit interest rates, balance their own stable operations and further support the real economy, and further benefit the real economy by lowering deposit interest rates. Expand space. "

On the afternoon of December 21st, it was revealed by the media that state-owned banks would cut the deposit interest rate on December 22nd. According to the reporter’s simple calculation, the annualized interest rate of three-year large deposit certificates of many state-owned banks is 2.65%, which is 2.35% after being lowered by 30BP. If you deposit 200,000 yuan for three years, the three-year interest will be 1,800 yuan less.

In fact, the annualized interest rate of this three-year certificate of deposit is only lowered by 25BP, and it is adjusted to 2.4%. If you save 200,000 yuan for three years, the three-year interest will be 1500 yuan less.

Affected by the expected reduction of deposit interest rate, the bond market went bullish in the afternoon today. At the close, the 10-year treasury bond futures turned from green to red in the quarter.

However, will the bond market strengthen for a long time?

Previously, Zhang Wei, the chief revenue officer of Founder Securities, counted the trend of the bond market after several rounds of deposit interest rate cuts this year (including a round of replenishment of interest rate cuts by small and medium-sized banks in early April for last year’s big banks). The results showed that after the intensive release of deposit interest rate cuts in April and June, the yield of government bonds dropped significantly; After the big bank cut interest rates in September, the bond market yield was adjusted, but after the small and medium-sized banks followed suit, the bond market strengthened again.

Li Yong, a soochow securities, believes that a larger reduction in the interest rate of long-term deposits can improve the trend of deposit regularization, which not only relieves the pressure on the debt side of banks, but also encourages residents to convert more deposits into consumption. However, the impact of lowering the deposit interest rate on the bond market is not as direct as lowering the policy interest rate directly, but in the medium and long term, it will still create a relatively downwind environment for interest rate bonds.

On the one hand, the decline of deposit interest rate will reduce the cost of bank debt, and on the asset side, it will tend to allocate interest rate bonds with low yield and risk to match it; On the other hand, the lowering of bank deposit interest rate will make it less attractive to residents. Residents who choose deposit products usually have low risk preference and tend to choose wealth management products or debt-based products to replace them, thus increasing the demand for bonds. In the short term, the downward adjustment of deposit interest rate and stock mortgage interest rate will not quickly stimulate the recovery of the real estate market, and there is no upward risk of interest rate exceeding expectations.

CITIC Securities clearly stated that since residents’ risk appetite is still low in the short term, even if the deposit interest rate is lowered, it is expected that the deposit scale will continue to rise. However, in the medium and long term, the phenomenon of "deposits moving" may be strengthened, and low-risk asset management products such as bank wealth management are expected to usher in incremental funds. For the bond market, after the cost of bank debt is controlled, it is possible to drive the overall downward trend of broad-spectrum interest rates; In the medium and long term, the scale of low-risk asset management products such as wealth management and debt base will increase, and the strengthening of the allocation power of the bond market will also indirectly push down interest rates.