How does the financial system yield 1.5 trillion yuan if the LPR is not lowered in June?

category:Finance
 How does the financial system yield 1.5 trillion yuan if the LPR is not lowered in June?


Marginal capital cost of banks has increased

In August 2019, the central bank pushed forward the marketization reform of loan interest rate. After the reform, LPR refers to MLF, and the loan interest rate anchors LPR. The main driving factors of LPR decline are the decrease of MLF interest rate and the decrease of bank capital cost.

In order to provide a benchmark for LPR pricing, the central bank will operate MLF on the 15th of every month (postponed in case of holidays) this year. Judging from the operation in June, MLF interest rate remains unchanged.

On June 15, the peoples Bank of China announced that in order to maintain the reasonable and abundant liquidity of the banking system, the peoples Bank of China carried out the medium-term lending facility (MLF) operation of 200 billion yuan, fully meeting the needs of financial institutions. The bid winning rate is 2.95%, which is the same as last time.

At the June 17 meeting of the State Council, it was pointed out that we should seize the key point of reasonable profit sharing, ensure the main body of the market and stabilize the basic economic market. We will further promote the financial system to make a reasonable profit of 1.5 trillion yuan to all kinds of enterprises throughout the year through a series of policies such as guiding the downward movement of loan and bond interest rates, issuing preferential interest rate loans, implementing loans for small and medium-sized micro enterprises to postpone repayment of principal and interest, supporting the issuance of unsecured credit loans for small and micro enterprises, and reducing bank charges.

According to the data of the central bank, in March this year, the interest rate of general loans (excluding personal housing loans) was 5.48%, 0.62 percentage points lower than that in July 2019 before the LPR reform, significantly higher than the one-year LPR (0.46 percentage points) in the same period.

In the second half of the year, LPR may speed up

In Lujiazui Forum last week, Yi Gang, governor of the central bank, said that we should guide the market interest rate to continue to decline through market-oriented reform of interest rates, promote the financial sector to make a reasonable profit to enterprises, and strive to alleviate the problem of expensive financing. Since this year, the financial sector has made profits to enterprises, mainly including three parts: first, by reducing interest rates. Second, direct monetary policy tools to promote the transfer of interest. Third, the bank reduces the charges to make profits. It is estimated that the financial system will yield 1.5 trillion yuan to enterprises through the above three aspects this year.

On June 17, the national regular meeting also pointed out that we should make comprehensive use of such tools as reducing the standard and refinancing to keep the market liquidity reasonable and abundant, increase efforts to solve the financing difficulties and ease the capital pressure of enterprises. This is the second time that the State Council has mentioned lowering the standard. Some market participants believe that in most cases, after the National Peoples Congress mentioned the reduction of the standard, there will be measures to reduce the standard within two weeks. In addition, the large-scale issuance of government bonds such as anti epidemic special treasury bonds also needs to provide liquidity support by reducing the standard.

In the past year or two, the National Peoples Congress has made the first call for the reduction of standards, and then implemented it within two weeks, that is, the so-called two week law. This time, it is estimated that there will not be much change. Zhang Jiqiang, chief analyst of Huatai Group, said.

Wang Qing believes that in the second half of the year, in the process of GDP growth returning to the potential economic growth level (about 6.0%), further efforts of macro policies are still needed, among which the demand for counter cyclical adjustment of monetary policy is not weakened. This year, while the financial system is increasing the interest yield to the real economy, the process of policy interest rate reduction and standard reduction is expected to continue in the second half of the year. There is still about 40 basis points room for MLF and Omo interest rates to be lowered. In order to smoothly guide the downward trend of corporate loan interest rate, there is a certain space for policy interest rates such as MLF and Omo to be lowered during the year. In the second half of the year, the downward speed of LPR quotation will be accelerated, which means that the loan interest rate of general enterprises will be reduced by a larger margin over the same period, which will stimulate the demand of enterprise credit and promote the development of broad credit to a deeper level, Wang said Source: responsible editor of 21st century economic report: Yang Bin_ NF4368

Wang Qing believes that in the second half of the year, in the process of GDP growth returning to the potential economic growth level (about 6.0%), further efforts of macro policies are still needed, among which the demand for counter cyclical adjustment of monetary policy is not weakened. This year, while the financial system is increasing the interest yield to the real economy, the process of policy interest rate reduction and standard reduction is expected to continue in the second half of the year. There is still about 40 basis points room for MLF and Omo interest rates to be lowered.