How commercial banks pricing loans has become the focus of market attention. Reporters interviewed several commercial bankers to learn that Xingye, Zhejiang, Standard Chartered and other banks have completed the system transformation, or have issued the first loan based on the pricing of the new LPR mechanism. However, at present, fixed loan interest rate contracts are still the main way for banks to sign loan contracts. In addition, due to policy transmission and promotion, new business after August 20 may not all be priced according to LPR.
At the same time, it is worth noting that after the introduction of the new LPR mechanism, the interest rate derivatives market has warmed up and the transaction is active.
New pricing mechanism
After the central bank issued the new LPR mechanism, some banks responded quickly. On August 20, the relevant person in charge of Societe Generale Bank told reporters that at present, the Contract Revision and system transformation of Societe Generale Bank have been completed as required, and it fully supports the use of market-oriented interest rates such as LPR and SHIBOR in credit pricing.
On the same day, Zhejiang Merchant Bank said that it had completed its first LPR floating-rate loan, which was 35 million yuan, to a private manufacturing enterprise in Jinhua, Zhejiang Province, reducing the financing cost of about 20 basis points.
Will the new LPR mechanism certainly reduce the interest rate of corporate loans when the market interest rate is down? A person in charge of joint-stock business told reporters that the bank had made a good plan ahead of time for LPR reform. At present, the relevant work is progressing in an orderly manner, but the short-term impact on loan interest rates is limited.
The vice president of East China Branch of a joint-stock bank told reporters that the loan interest rate of the enterprise mainly depends on the qualification, risk assessment and the overall business relationship with the bank. At present, the banks business loans have been relatively market-oriented. It holds that the change of pricing mechanism has little effect on the pricing of bank loans. But in the long run, it must be beneficial for enterprises to borrow money. He added.
The vice-president of the East China Branch of the above-mentioned joint-stock bank said that the bank had already launched a loan contract floating at Shibor (Shanghai Interbank Offered Rate), but the acceptance rate was not high for some enterprises.
LPR Derivatives Market Trading Warms up
With the implementation of the new LPR interest rate, the derivatives market such as LPR interest rate trading is becoming more and more active.
After the central bank announced its decision to reform and improve the formation mechanism of LPR, the first transaction of interest rate derivatives of LPR was completed by Societe Generale Bank and Star Show Bank at a price of 4.20% for a one-year period (paid quarterly).
With the wide use of LPR in product pricing, demand for derivatives such as interest rate swaps is also heating up. According to Lu Zhengwei, chief economist of Societe Generale Bank.
On August 20, ICBC, Bank of China, Pudong Development Bank, Industrial Bank, CITIC Bank, Guangzhou Development Bank, Shanghai Bank, Qingdao Bank, Shanghai Agricultural and Commercial Bank, HSBC Bank, Star Show Bank, CITIC Securities, CITIC Corporation and Hualin Securities participated in LPR interest rate swap transactions. On that day, 20 interest rate swap contracts were concluded, with a total nominal principal of 2.98 billion yuan. The duration of the contracts ranged from one year to three years.
Interest rate swap refers to the exchange of interest rate payments of different nature between two parties on the basis of a nominal principal amount, that is, the exchange of interest rates with different interest rates in the same currency.
In Lus view, the choice of interest rate swap is determined by the interest rate judgment and demand of the participants, not by changing the fixed interest rate to the floating interest rate, but by the contrary. He predicts that LPR swap transactions will be more diversified and diversified in the future.
In addition to directly participating in derivatives trading market based on LPR pricing interest rate swap, banks and other financial institutions also carry out proxy interest rate swap business based on LPR with loan customers.
Shanghai Branch of Bank of Communications Shanghai Bairui Cleaning Machinery Co., Ltd. has launched a RMB interest rate swap swap transaction linked to one-year LPR interest rate to help customers convert one-year fixed-rate loans into floating-rate loans based on one-year LPR interest rate.
On August 21, Zhejiang Merchant Bank reached a proxy interest rate swap business with an amount of 77 million yuan, based on LPR, against a private enterprise in Hangzhou engaged in software and information technology services. At the beginning of the year, the company obtained a fixed interest rate loan in the bank. Through one-year interest rate swap business, the fixed interest rate of the loan was converted into the floating rate of fixed-point difference reinforced by LPR.
Short-term pressure on bank spreads
Huang Wentao, chief analyst of macro-consolidation of CITIC Construction Investment, believes that reducing intermediate fees and lending interest rates means that the return of banksassets will decrease, while the proportion of banks interbank liabilities should not exceed 1/3. Interest spreads may shrink further in the future. This will lead to a decline in bank profits.
Zeng Gang, deputy director of the National Laboratory of Finance and Development, said that in the short run, bank spreads will narrow and profits will be impacted; in the medium term, bank interest rate risk and credit risk management will become more difficult; in the long run, the marketization of loan interest rate will reshape bank risk preference.
Recently, at the mid-term performance conference held by the Postal Savings Bank in 2019, the impact of two tracks and one track on the Postal Savings Bank was discussed. Zhang Jinliang, chairman of the Postal Savings Bank, believed that the reform would promote the transformation of domestic commercial banksbusiness model and growth mode. For postal savings banks, they face both challenges and opportunities. On the one hand, the Postal Savings Bank has 589 million retail customers, which is a big rich mine. The marketization of interest rate will force us to dig deep into this rich mine and make it the most important growth point in the future. On the other hand, the retail strategy that the Postal Savings Bank has persisted for a long time makes us naturally adaptable to the reform of interest rate marketization.
Liu Guoqiang, deputy governor of the Peoples Bank of China, also said at a regular briefing on State Council policy held on August 20 by the State Council newly established by the Peoples Bank of China, It is possible that in the short term the interest rate gap between banks will decrease and the profits of banks will be affected. There is some truth in this calculation, but in the long run, banks are service industries and rely on the real economy. If the financing cost of the real economy drops, the service objects of the banks will increase, the financing cost of the real economy will decrease and the development will improve. The bad rate of bank credit will come down and the credit quality will be improved. Improvement. This is also the virtuous circle and healthy development of the financial and real economy that we hope to see, which is good in the long run. The key word of the reform is still marketization, which means to improve the ability of banks to set prices independently. Sun Guofeng, Director of the Monetary Policy Department of the Central Bank, said. Sun Guofeng believed that the decrease of loan interest rate in the short term may also have some influence on the interest margin and profit of banks. On the other hand, as far as deposit interest rate is concerned, the deposit benchmark interest rate is reserved and will be retained for a long time in the future. The Peoples Bank of China will also guide the self-regulation mechanism of market interest rate pricing and strengthen the deposit interest rate. Self-regulation management, maintaining market competition order, stabilizing the cost of banksliabilities, and creating favorable conditions for the sustainable development of banks. In the short run, the impact is uncertain, and it is difficult to say that there is a calculation. In the medium and long term, the improvement of independent pricing ability of bank loans is conducive to the sustainable and healthy development of banks, and is beneficial to banks. Source: Author of Economic Observation Network: Editor-in-Charge of Hu Yanming: Zhong Qiming_NF5619
Sun Guofeng believed that the decrease of loan interest rate in the short term may also have some influence on the interest margin and profit of banks. On the other hand, as far as deposit interest rate is concerned, the deposit benchmark interest rate is reserved and will be retained for a long time in the future. The Peoples Bank of China will also guide the self-regulation mechanism of market interest rate pricing and strengthen the deposit interest rate. Self-regulation management, maintaining market competition order, stabilizing the cost of banksliabilities, and creating favorable conditions for the sustainable development of banks. In the short run, the impact is uncertain, and it is difficult to say that there is a calculation. In the medium and long term, the improvement of independent pricing ability of bank loans is conducive to the sustainable and healthy development of banks, and is beneficial to banks.