Deposit competition intensified, and the proportion of loans from the central bank increased significantly

category:Finance
 Deposit competition intensified, and the proportion of loans from the central bank increased significantly


The liability side of commercial banks mainly consists of deposits, interbank liabilities, bonds payable and borrowing from the central bank. Taking 36 listed banks as samples, this paper presents the panorama and changes of the liabilities side of banks in the first half of the year. Overall, the proportion of deposits of listed banks increased slightly in the first half of the year, the proportion of interbank liabilities and bonds payable decreased slightly, and the proportion of loans from the central bank remained unchanged.

Large banks and some rural commercial banks have a solid deposit base

The assets and liabilities of listed banks continued to expand in the first half of this year: the assets of 36 banks totaled 202 trillion yuan, an increase of 7.8% compared with the end of last year. On the debt side, the total liabilities of 36 banks in the first half of the year amounted to 186 trillion yuan, an increase of 8% compared with the end of last year. From the individual point of view, the assets and liabilities of the 36 listed banks have maintained a positive growth, and there is no reduction of balance sheet, which shows that banks have increased their support to the real economy in the first half of the year.

Wind data shows that by the end of June, the deposit balance of 36 listed banks totaled 141.83 trillion, an increase of 12.59 trillion compared with the end of last year; the proportion of deposits in total liabilities in the same period was 76%, 1.2 percentage points higher than that at the end of last year. This is related to the deposit derivative brought by the expansion of banks on balance sheet assets this year.

In terms of the overall deposit structure, under the influence of the decrease of settlement business and the fixed deposit, the proportion of current deposits of companies and individuals was 0.5% and 0.4% lower than that at the end of last year. The reason is that, under the impact of the epidemic, the enterprise sector and the resident department are pessimistic about the future: enterprises reduce investment, increase fixed deposit, residents reduce consumption and increase savings, leading to the transformation of current deposit to fixed deposit.

The data also shows that in the first half of the year, the proportion of deposits in urban commercial banks and joint-stock banks increased by 2.0 and 1.9 percentage points to 65.7% and 62.8% respectively, but the proportion was lower than that of large state-owned banks and agricultural commercial banks. The reason is that the network layout is relatively limited, the debt structure is relatively flexible, and the proportion of interbank debt financing is relatively large. As the deposit base is relatively weak, they are also the main receivers of high interest deposits.

From the proportion of deposits to liabilities, the proportion of postal savings bank was the highest, reaching 96% at the end of June. Bank of Wuxi, Bank of Zhangjiagang, Jiangyin bank, Changshu bank and Sunong bank are closely followed, accounting for more than 80% of the total deposits, indicating that the five agricultural commercial banks in Jiangsu Province have deep cultivation and strong ability to absorb deposits. Next came the four major industrial and rural construction enterprises, accounting for about 80%. Even the lowest proportion of Industrial Bank, its deposits accounted for 59% of total liabilities, in other words, deposits are the main part of commercial banks liabilities.

In recent years, with the intensification of deposit competition, some banks have increased the marketing of structured deposits, smart deposits and other products, resulting in upward pressure on the deposit interest rate of banks. However, in the first half of this year, the interest payment rate of bank deposits declined to a certain extent due to the guidance of the regulatory authorities to reduce the structural deposits with high interest rates.

As for whether the cost of deposit liabilities can continue to fall or remain at a low level. Frankly speaking, the competition for deposits is still very fierce. Zhang Qingsong said.

The proportion of interbank liabilities continued to decline

Interbank debt was once a sharp weapon to support the expansion of small and medium-sized banks. However, since 2017, the supervision of interbank business has become stricter, and the proportion of interbank liabilities has continued to decline, and this trend has also continued in the first half of this year. Wind data shows that in the first half of the year, the balance of interbank liabilities of 36 listed banks totaled 21.4 trillion, an increase of nearly 800 billion compared with the end of last year; however, the proportion of interbank liabilities in total liabilities was 11.1%, down 0.5 percentage points compared with the end of last year.

In terms of bank types, the proportion of interbank liabilities of all types decreased in the first half of the year compared with the end of last year. Specifically, the proportion of large banks, joint-stock banks, urban commercial banks and agricultural commercial banks decreased by 0.3, 0.8, 0.5 and 0.7 percentage points to 9.1%, 17.2%, 13.5% and 3.7% respectively. Due to the extensive sources of liabilities and stable structure of large banks, the recognition degree of agricultural commercial banks is not high, and the dependence of the two on the liabilities of the same industry is low, while the proportion of joint-stock banks and urban commercial banks is relatively high.

The bonds payable by banks are mainly interbank certificates of deposit, financial bonds and secondary capital bonds. Since 2014, with the issuance of inter-bank certificates of deposit, banks bond financing has gradually increased. Among the bonds payable by banks, the interbank certificates of deposit (CDS) gradually occupy a dominant position.

In terms of bank types, the proportion of bonds payable of state-owned large banks, joint-stock banks, urban commercial banks and agricultural commercial banks decreased at the end of June: 3.6%, 11.1%, 14.5% and 12.2%, respectively, down 0.4, 1.1, 1.7 and 2.8 percentage points compared with the end of last year.

Liu Jin, President of Everbright Bank, said at the banks performance meeting in the first half of the year that, while the market liquidity remained reasonable and sufficient in the first half of the year, the interbank debt interest rate fell sharply. From the perspective of cost, there are periodic opportunities to increase the absorption of interbank liabilities. However, Everbright Bank always adheres to the core positioning of deposits, consolidates the debt base and promotes sustainable development.

According to the analysis, the main reasons are as follows: first, the proportion of deposits has increased, and the demand for interbank liabilities has decreased; second, the interest rate of certificates of deposit in some periods is still generally higher than the deposit interest rate; third, the supervision still strictly restricts the use of interbank funds; fourth, the deposit interest rate is more stable, but the interbank liabilities and interbank deposit certificate interest rate may rise with the market interest rate, but the interest rate is not stable. Compared with the expansion of interbank liabilities brought by the central banks money supply, deposits give banks a stronger sense of security.

In fact, since July, with the central banks monetary policy margin tightening, the market interest rate has risen, and the cost of interbank liabilities and bonds payable has risen sharply.

The title of borrowing from the central bank means that after the central bank lends money to the bank, the bank forms a liability to the central bank. At present, such liabilities are formed by the operation of monetary policy instruments such as MLF, PSL, reverse repurchase, tmlf (targeted medium-term lending facility) and refinancing. On the whole, the proportion of commercial banks borrowing from the central bank is relatively low.

Wind data shows that in the first half of the year, the loan balance of 36 listed banks from the central bank totaled 4.8 trillion, an increase of about 60 billion compared with the end of last year; the proportion was about 3% as compared with the end of last year. In terms of bank types, the proportion of loans from the central bank by joint-stock banks and urban commercial banks was higher, accounting for 5.1% and 4.5% at the end of June, respectively, while that of agricultural commercial banks and large state-owned banks was 3.6% and 2.6% respectively.

Analysis shows that the deposit base of state-owned large banks and agricultural commercial banks is good, and the source of funds is relatively stable, while the joint-stock banks and urban commercial banks have relatively weak ability to absorb reserves, and they are more willing to steadily borrow from the central bank. It is worth noting that the balance of loans from the Central Bank of the listed agricultural Commercial Bank of China was 61.907 billion last year, a significant increase of 32.6% over the same period of last year, and its proportion in debt also increased by 0.6% to 3.6%. This reflects that the structural policy of the central bank has indeed played an effective supplementary role in the debt of agricultural commercial banks since the outbreak.

Generally speaking, the main counterparties of monetary policy instruments such as MLF of the central bank are state-owned banks and joint-stock banks. However, the refinancing tools launched in response to the epidemic this year have benefited agricultural commercial banks in a large range. In response to the epidemic situation, in the first half of the year, the central bank innovated and launched the policy of 300 billion yuan of special re loan for epidemic prevention and control, the rediscount policy of 500 billion yuan of re loan and re discount policy tools of 100 billion yuan of re loan to support small and micro businesses and private enterprises. The loans of agricultural commercial banks are mainly invested in small and micro enterprises and private enterprises, which are supported by the central banks re loan and rediscount amount, which is reflected in the increase of borrowing from the central bank on the balance sheet.

Looking back, structural deposits have continued to drop since July and the magnitude is greater than that in the first half of the year, which helps to reduce deposit costs. However, the market interest rate rose rapidly, and the cost of interbank liabilities and bonds payable rose correspondingly. Under the interaction of the two, the trend of interest bearing cost of banks is still uncertain. After the long-term pressure drop of commercial banks, the lack of inter-bank liabilities is shown by the lack of CDs. Among them, small and medium-sized banks have greater pressure drop and significant debt pressure, so the effect of structural targeted RRR reduction for small and medium-sized banks may be better. This will help reduce interbank liabilities and bond payable costs, thus providing room for lower loan interest rates. (this article is excerpted from the report on the development trend of Chinas financial industry (2020), which will be released at the 15th Asian financial annual meeting in the 21st century to be held on November 10-11, 2020) source: 21st century economic report editor in charge: Wang Xiaowu_ NF

Looking back, structural deposits have continued to drop since July and the magnitude is greater than that in the first half of the year, which helps to reduce deposit costs. However, the market interest rate rose rapidly, and the cost of interbank liabilities and bonds payable rose correspondingly. Under the interaction of the two, the trend of interest bearing cost of banks is still uncertain. After the long-term pressure drop of commercial banks, the lack of inter-bank liabilities is shown by the lack of CDs. Among them, small and medium-sized banks have greater pressure drop and significant debt pressure, so the effect of structural targeted RRR reduction for small and medium-sized banks may be better. This will help reduce interbank liabilities and bond payable costs, thus providing room for lower loan interest rates. (this paper is excerpted from the report on the development trend of Chinas financial industry (2020), which will be released at the 15th Asian financial annual conference in the 21st century to be held on November 10-11, 2020)