Credit chain not repaired? How to reduce the cost of central bank combination

 Credit chain not repaired? How to reduce the cost of central bank combination

The reduction is expected to continue for several days, and bankers believe that it seems unusual to announce a comprehensive reduction on New Years day. Stock market investors are looking forward to this new years gift package. On January 2, the Shanghai composite index opened at a high of 3066.34, up 1.15% for the whole day, welcoming the start.

A few days ago, the central bank announced to switch the pricing benchmark of stock floating rate loans. In addition, at the deposit side, many banks began to cancel the interest products based on files; and the CBRC and the Central Bank jointly issued a draft for comments on cash management financial products.

The market-oriented reform of interest rate has accelerated, and the determination of the central bank to dredge the transmission of monetary policy is obvious. As a corporate customer manager of a joint-stock bank in Beijing, the trend of policy also determines the direction of Lin Jianpings work.

The central bank stipulated that from January 1, the newly signed loan contract must be linked to LPR. And after the central bank announced the switch of deposit and loan, Lin Jianpings Bank recently notified us to do a good job in the connection work, and the contract text, interest rate adjustment, benefit calculation and other items were all in progress one by one. A new deal for every lender will be launched quickly.

In order to reduce the cost of entity financing, since the end of 2018, the central bank has repeatedly lowered the standard and implemented structural monetary policies such as targeted reduction, tmlf, differential reserve ratio, etc. In August 2019, the peoples Bank of China introduced a new LPR mechanism, with 18 quotation banks generating new LPR, and gradually anchoring the loan contract to LPR, breaking the invisible lower limit of loan pricing, and guiding the loan interest rate to decline gradually.

The measures such as directional reduction and reduction play a certain role, but they are not so large. The bank has more money, the cost of capital has decreased, but the bank has more money, can the money go out? Lin Jianping plays drums in his heart.

In fact, Chinas immediate problem is to curb the further decline of economic growth. Therefore, while stepping up various institutional reforms to straighten out the transmission mechanism, it is necessary for China to implement an expansionary fiscal policy, supplemented by a moderately loose monetary policy. Yu Yongding, member of the School Department of the Chinese Academy of Social Sciences, told the economic observer.

New years Day

Its the right time to reduce the overall accuracy.

On the afternoon of January 1, the central bank decided to reduce the reserve ratio of financial institutions by 0.5 percentage points (excluding financial companies, financial leasing companies and auto financing companies) on January 6, 2020. This release of long-term funds is about 800 billion yuan.

This time, the signal effect is obvious. The central bank pointed out that the reduction at the beginning of the new year is conducive to hedging the cash demand before the Spring Festival, increasing the sources of funds for financial institutions and reducing the cost of funds for financial institutions, so as to better guide private enterprises and small and micro enterprises to reduce their financing costs.

Wen bin, chief researcher of China Minsheng Bank, analyzed why the first day of the new year reduced the standard. He believed that there would be about 600 billion yuan of reverse repo due in the first ten days of January 2020. The demand for funds close to the Spring Festival is under great pressure. Enterprises pay taxes, banks pay the standard and restart the issuance of local government bonds will bring pressure on liquidity. By reducing the standard, we can ensure that the market liquidity is reasonable and abundant.

Liao Zhiming, chief banking analyst of Tianfeng securities, told reporters that the reduction is a specific implementation of the requirements of the prime minister in the early stage, and can also cope with the impact of liquidity such as the Spring Festival cash withdrawal in January and the issuance of local bonds, and help the bank to invest a large amount of credit in January to support the steady growth of the economy.

Liao Zhiming said that January is also the assessment period for the targeted reduction of inclusive small and micro loans. Considering that the bank has a large amount of inclusive small and micro loans in 2019, it is expected that more banks will reach the 150bp preferential level, and some additional liquidity will be released. Considering that the impact of cash withdrawal on liquidity during the Spring Festival is as high as 2 trillion yuan, it is expected that the central bank will also adopt MLF, 28 day reverse repo and other tools to provide liquidity and maintain reasonable and sufficient liquidity.

This reduction of the standard can reduce the cost of liabilities of banks by more than 15 billion per year, which is obviously good for banks, and can directly increase the growth rate of profits by about 0.6 percentage points. In addition, the reduction is conducive to faster economic stability, asset quality is expected to improve, and support the valuation of banking stocks According to Liao Zhimings analysis.

Compared with the reduction of monetary policy, in the view of Lin Jianping, who works in the bank, LPR has a far-reaching impact. In the past, the frequency of benchmark interest rate change was small, which was not suitable for frequent adjustment, but now LPR quoted a price once a month to adjust with the market capital abundance. Moreover, from the perspective of the current economic cycle, the overall interest rate is a downward trend, which should be able to be transmitted to credit enterprises.

The reduction represents an increase in the amount of money banks can lend. But to reduce the financing cost, it still needs LPR reform, or the central bank guides the interest rate downward through the open market. Wang Jun, chief economist of Zhongyuan bank, also pointed out in an interview with the economic observer.

Wang Jun said that in terms of investment direction, at present, banks generally face the problem of lack of high-quality assets and insufficient demand, and commercial banks always face the balance between putting in assets and preventing risks. In 2020, we will focus on the implementation of the central economic work conference, and make up for the shortcomings in advanced manufacturing industry, infrastructure and other areas will become the focus of asset investment in the future.

Has the loan interest rate dropped?

Now, lets focus on the real economy.

Lu Youwen, general manager of Ningde times Motor Technology Co., Ltd., told reporters that in recent years, he clearly felt the decrease of loan interest rate. From the previous benchmark interest rate up 20% - 30%, last years interest rate has become in the benchmark interest rate up 5% - 10%.

As a local start-up with better qualifications, he has obtained better financial support from four major state-owned banks and local banks. Now, Lu Youwen is ready to replace the original loan contract with one linked to LPR. Lu Youwen may not be many. Judging from the average interest rate data of general loans disclosed by the central bank, the downward effect of real economy financing cost is not obvious. In September 2018, the published average interest rate of general loans (excluding bill discount and personal housing loans) reached the top of 6.19% in recent years, and then fell, hovering around 6%, without a sustained downward trend.

In particular, in September 2019, the average interest rate of general loans rebounded by 2bp compared with that in June, mainly due to the increase in the proportion of corporate medium and long-term loans in new loans. If the structural adjustment factors are excluded, Wang Jian, chief financial analyst of Guoxin Securities Economic Research Institute, believes that the interest rate of similar loans is estimated to decline less, which fails to achieve the expected policy effect.

According to the vice president, inter-bank funds are rich, which can be seen from the interest rate trend of inter-bank lending market. But for small and medium-sized banks, the flow of financial institutions is very unbalanced. Under a series of monetary policies of the central bank, the cost of liabilities of small and medium-sized banks not only did not decline, but also increased relatively, for example, the cost of large banks decreased by 20bp, while that of small and medium-sized banks only decreased by 5bp, so the cost of liabilities increased relatively.

Small and medium-sized banks used to be the middle force to support local small and micro enterprises. Compared with the goal of reducing the financing cost of enterprises, the vice president believes that the core is the problem of financing difficulty. Although the interest rate has been significantly reduced at present, many banks can not find the assets of core investment, and the enterprises that should be supported may not be supported, such as most small and medium-sized enterprises.

Its not necessarily a good thing for star enterprises or small and micro star enterprises to be clustered. According to the vice president, policy support should also be strengthened in this regard for some immature or non statement start-ups, such as the introduction of guarantee funds.

The essence of dredging

So, how to dredge the last kilometer of monetary policy transmission?

According to Ma Jun, director of financial and development research center of Tsinghua University and member of monetary policy committee of the central bank, it is not simply a technical issue of short-term interest rate transmitting to long-term interest rate. Under the current macro situation and system, no matter what short-term interest rate is used as the policy interest rate, no matter which interest rate is used as the pricing benchmark by the bank, the financing difficulty of private enterprises will increase.

This is the result of the superposition of three problems: the downward economic cycle, the spillover effect of deleveraging measures and the non neutral competition system between state-owned enterprises and private enterprises. Ma Jun thinks.

And how to make the real enterprise cheaper to borrow money? This should be analyzed from deposit and loan. There are many methods of loan pricing, Wang Jian said. Taking the most typical cost plus pricing method as an example, banks should consider their own debt cost, business cost, risk cost and reasonable profit (capital cost) to price loans to customers, and add them one by one.

In the ideal condition, the cost of getting money is high, so the loan price is high. Therefore, the rigidity of interest rate of banks liabilities is the main cause of the difficulty of reducing the loan interest rate, and the rigidity of deposit interest rate is the main cause of the rigidity of liability cost.

Guo Yuwei, an analyst at Societe Generale research, told the economic observer that there are several aspects to the block of interest rate transmission: first, the current interest rate marketization is more about the marketization of the loan side, and the interest rate of the deposit side has not been fully liberalized. Deposits are the main source of commercial banks liabilities. If the deposit interest rate is difficult to fall, the capital cost of commercial banks is also difficult to reduce.

Second, considering that the net stable capital ratio (ns-fr) and liquidity matching ratio (LMR) are up to the standard, commercial banks tend to pay higher prices for deposits than for interbank funds, which also affects the transmission of interbank liquidity improvement to the deposit side.

How to unblock the block? Mingming, deputy director of CITIC Securities Research Institute, believes that in view of the increasing pressure on the debt side of banks, the difficulties of the debt side of banks need to be solved before substantial interest rate reduction can be promoted in the process of pricing anchor transformation of stock floating interest loans.

For example, in recent years, many banks have received the relevant requirements on regulating the self regulatory mechanism of interest rate pricing in the national market to withdraw fixed deposits in advance and calculate interest on file. The product of calculating interest on file used to be a magic weapon for banks, which mainly refers to that when withdrawing fixed deposits in advance, interest is calculated not according to current interest, but according to the latest file interest rate.

In addition, for some financial products, on December 27, the CBRC and the peoples Bank of China issued the notice on regulating cash management and product management (Draft for comments) (hereinafter referred to as the notice).

Liu Xiaochun believes that now, more importantly, the demand of the real economy. First, the demand of normal enterprises is not strong; second, the demand for liquidity hungry enterprises may not be reasonable, and some may be zombies that need to be cleared. This is a contradiction. The problem of monetary policy transmission may need to be studied more about the contradiction. We cant talk about Finance on the basis of finance.

The logic of interest rate marketization

Liu Xiaochun stressed that the marketization of interest rate is to make the fluctuation of interest rate better reflect the changes of the market, not to make the interest rate only fall or not rise, but to change the anchor for better marketization. Therefore, LPR and interest rate liberalization cannot be regarded as policy tools for interest rate reduction.

Wang Jun believes that in addition to financial efforts, we need to accelerate the reform of state-owned enterprises and compete fairly with private enterprises in accordance with the principle of competition neutrality. The price of capital for private enterprises such as manufacturing industry is still very high. Only let the state-owned enterprises and private enterprises stand in the same running line, rather than let the state-owned enterprises become the market subject relying on government subsidies and credit support excessively, is to promote LPR reform in the micro basic field a very important aspect.

Lin admits that he prefers to do business with big customers. He said that objectively speaking, the cost of doing a small and micro business is almost the same as that of doing a large business, such as personnel, energy, process, etc., but there is a big difference in scale and revenue.

Although the State encourages Inclusive Finance, the growth of small and micro businesses in its branches is not easy; from the proportion and actual situation, there are still many large customers, such as some central enterprises and state-owned enterprises. Reducing the standard is a manifestation of loose monetary policy, which leads to lower capital cost of banks. As for whether it can be transmitted to enterprises, there must be a connection, but it is not inevitable. Lin Jianping told reporters that in terms of his business, for example, now the deposit side cancels the file interest rate, and customers used to ask for the file interest rate, artificially raising the banks capital cost. The cost is high, the interest rate is high.

For example, in the past, large customers with abundant funds had more deposits, and it was easy to get loans. The cost for banks to get funds from large customers was high, while the interest rate for loans was low, so the profits of banks were low. Now standardizing deposits and making room for bank interest margin will also help banks transfer funds from traditional large enterprises to small and medium-sized enterprises. He analyzed.

Lin Jianping said that the newly signed loan contracts are all priced on the basis of LPR quotation. If LPR goes down in the future, small and micro enterprises should benefit more. According to Guo Yuwei, the financing cost of the real economy is expected to continue to decline in 2020. On the one hand, the central bank announced to promote the stock floating rate loan to change the interest rate benchmark. The balance of stock loans of financial institutions in China is about 150 trillion yuan. If the stock floating interest loans are converted to LPR pricing, once the anchor change of stock loans is completed, the interest payment burden of the real economy will be significantly reduced. On the other hand, at present, the MLF interest rate is still higher than that of the state-owned banks and stock banks in the same period. There is room for further reduction of MLF interest rate, and the LPR linked to it is also expected to continue to decline. (at the request of the interviewer, Lin Jianping is a pseudonym) source: editor in charge of Economic Observer: Yang qiandou nf4425

According to Guo Yuwei, the financing cost of the real economy is expected to continue to decline in 2020. On the one hand, the central bank announced to promote the stock floating rate loan to change the interest rate benchmark. The balance of stock loans of financial institutions in China is about 150 trillion yuan. If the stock floating interest loans are converted to LPR pricing, once the anchor change of stock loans is completed, the

The burden of interest payment in the economy will be significantly reduced.

(at the request of the interviewer, Lin Jianping is a pseudonym)