Recently, the Bank of China Research Institute released the "2024 Fourth Quarter Economic and Financial Outlook Report" (hereinafter referred to as the "Report"), stating that in the third quarter of this year, China's economy continued to recover, but the issue of unbalanced economic recovery remained prominent. Looking forward to the fourth quarter, the foundation of China's economic recovery still needs to be further consolidated. If the overall external environment remains stable, macro policies are intensified and effective, and domestic demand recovers faster, it is expected that the GDP growth for the fourth quarter and the whole year will be around 5.1% and 5%, respectively.

Wang Jiaqiang, a senior researcher at the Bank of China Research Institute, said that the banking industry continues to increase support for the real economy, with the scale of assets and liabilities continuing to expand, but the growth rate has fallen. In the second quarter, the total assets of commercial banks reached 370 trillion yuan, a year-on-year increase of 7.3%; the total liabilities were 341.3 trillion yuan, a year-on-year increase of 7.1%. The growth rate of the scale of assets and liabilities is in line with economic development and the needs of the real economy, ensuring smooth monetary policy transmission.

Advertisement

At the same time, credit continues to play an important role in the growth of bank scales. At the end of June, the balance of RMB loans issued to the real economy accounted for 62.6% of the social financing stock size during the same period, which is basically the same as the same period last year. Wang Jiaqiang analyzed that for the whole year, the scale of commercial bank credit will grow moderately, and will pay more attention to structural optimization. It is expected to achieve higher growth rates in areas such as supporting residents' consumption and supporting the development of new quality productive forces, becoming a new driving force for the continuous growth of the scale of the banking industry's assets. It is expected that the growth rate of the scale of assets and liabilities of commercial banks in 2024 will maintain a higher level of around 8%.

Liang Jing, a senior researcher at the Bank of China Research Institute, said that looking back at the third quarter of this year, since the end of July, as the central bank started to cut interest rates, more banks have reduced deposit rates, showing the following characteristics. First, the deposit rates of various institutions have generally decreased. Following the interest rate cut by state-owned large banks on July 25, national joint-stock banks quickly followed suit. Since August, more local small and medium banks such as Shanghai Bank, Suzhou Bank, Hangzhou Bank, and Huishang Bank have reduced deposit rates, and the reduction of deposit rates has now become a general trend.

Second, the decline in medium and long-term deposit rates is greater. Currently, most banks have set the reduction range of fixed deposit interest rates for one year and below to 0.1 percentage points, and the reduction range for two-year and three-year fixed deposits is generally 0.2 percentage points, with a larger reduction range for long-term interest rates.

In addition, the reduction range of deposit rates is greater than that of the loan side. According to the central bank's interest rate cut arrangement in July, the loan market报价 interest rate (LPR) for one year and above five years both decreased by 10 basis points, which is lower than the 20 basis point reduction of the bank's medium and long-term deposit interest rates. This is the biggest difference between this round of deposit rate cuts and previous deposit rate cuts.

The "Report" points out that the reduction of deposit rates will have a long-term chain reaction on residents' savings and investment behavior. On the one hand, some deposits may "move" to small and medium financial institutions. At present, some small banks still have products with a three-year deposit interest rate of around "3". However, considering factors such as convenience and stability, the scale of this part of the deposit transfer will not be too large. On the other hand, some deposits may also be diverted to the wealth management market, and the development of the asset management industry is facing new changes. As more banks join the ranks of deposit rate cuts, it is expected that the scale of wealth management is expected to continue to grow rapidly in the second half of 2024.

"The reduction of deposit rates is both an inevitable requirement for commercial banks to cope with the narrowing of net interest margins and a reflection of the effective operation of the market-oriented adjustment mechanism for deposit rates." Liang Jing said that this deposit rate cut helps to alleviate the pressure of liability costs brought by the regularization and long-termization of bank deposits, reduce the cost of bank funds, and thus create favorable conditions for banks to expand credit allocation and increase support for the real economy, thereby better serving the real economy. From the released data, in the second quarter of 2024, the net interest margin of commercial banks was 1.54%, which was the same as the first quarter, and the pressure of narrowing net interest margins remained large.

Wang Jiaqiang believes that for the whole year, in order to maintain the basic stability of the net interest margin and consolidate the ability to support the real economy, commercial banks will continue to optimize pricing capabilities. The adjustment of deposit挂牌 interest rates will be more flexible, but there may be differences in the term structure, and the reduction range of fixed deposit interest rates may be relatively larger; some state-owned large banks and joint-stock banks with internationalization capabilities will fully grasp the time window of the high-interest environment abroad to optimize overall profitability. Considering the economic recovery and the development of non-interest businesses, the net profit growth rate of commercial banks in 2024 is expected to maintain around 1%.

It is worth noting that recently, several policies that help stabilize growth and expectations, such as reducing reserve requirements and interest rates, and reducing the interest rates of existing housing loans, have been officially announced and implemented. Wang Jiaqiang said that in the future, macro policies are expected to further intensify, new quality productive forces will continue to be cultivated, and the momentum of industrial structure transformation and upgrading is good. Looking forward to the fourth quarter, China's economy will continue to improve, the banking industry will develop steadily, the scale will continue to grow, profitability will be relatively stable, and asset quality will be generally good.