Core Insights - The announcement from Inner Mongolia's Tongyu County Mengyin Village Bank regarding the cancellation of 5-year fixed deposits has drawn market attention, marking the first instance of such a move by a bank [1] - Many banks are suspending or have already removed 5-year specialty fixed deposit products, while 3-year specialty fixed deposits are becoming competitive and require prior reservation to secure [2][3] - The phenomenon of long-term deposit rates being lower than short-term rates has become commonplace, with several banks offering lower rates for 5-year deposits compared to 3-year deposits [4][5] Summary by Sections Deposit Rate Adjustments - Mengyin Village Bank has reduced its 5-year fixed deposit rate to 1.9%, which is only 0.5% higher than its 3-year fixed deposit rate before adjustments [1] - Other banks, including China Merchants Bank, have also suspended their 5-year specialty fixed deposit products, offering only standard fixed deposits at lower rates [2][3] Market Trends - The trend of long-term deposit rates being lower than short-term rates is evident, with banks like China Merchants Bank and SPDB offering 5-year fixed deposits at rates below 1.4% [4][5] - The average rate for 3-year specialty fixed deposits can reach up to 1.75%, making them more attractive compared to 5-year options [4] Future Outlook - Industry experts predict that deposit rates will continue to decline, leading banks to adjust their deposit products and strategies to manage costs effectively [6][7] - The narrowing of net interest margins across the banking sector is a significant concern, prompting banks to reconsider their long-term deposit offerings [8]

Core Viewpoint - The recent cancellation of long-term deposit products by banks, particularly in Inner Mongolia, highlights a trend where banks are attempting to alleviate pressure on net interest margins by phasing out these products, which were once key for attracting deposits [1][2][4]. Group 1: Market Trends - Several village banks in Inner Mongolia have announced the cancellation of five-year fixed deposit products, with other banks also reducing interest rates on various deposit terms by 5 to 10 basis points [2][3]. - Nearly half of the private banks have quietly removed three-year and five-year fixed deposit products from their apps, with some institutions now offering a maximum deposit term of only one year [2][3]. - Major banks have also followed suit, with many national and regional banks discontinuing long-term deposit products and large certificates of deposit [3][4]. Group 2: Financial Implications - The direct reason for the removal of long-term deposits is to ease the pressure on net interest margins, which have reached historical lows, with commercial banks' net interest margin dropping to 1.42% as of the second quarter [4][5]. - The narrowing of net interest margins is evident across different types of banks, with city commercial banks, rural commercial banks, and private banks experiencing declines of 8 basis points, 14 basis points, and 30 basis points respectively compared to the previous year [4]. - Analysts suggest that the reduction in high-cost long-term deposits will help lower banks' funding costs, potentially stabilizing and improving net interest margins in the future [4][6].

Core Viewpoint - Several banks are discontinuing long-term fixed deposit products, particularly 3-year and 5-year terms, in response to ongoing pressure on net interest margins and a shift in their profit models [2][8]. Summary by Sections Bank Actions - Multiple banks, including village banks, have announced the cancellation of 5-year fixed deposit products, with some also removing 3-year fixed deposits from their offerings [2][4]. - As of November 10, 9 private banks have removed 5-year fixed deposit products from their apps, and some have also discontinued 3-year fixed deposits [4][5]. Interest Rate Adjustments - Interest rates for 1-year and 3-year fixed deposits are now often higher than those for 5-year deposits, leading to a common phenomenon of "rate inversion" [2][5]. - For example, the Inner Mongolia Tuyuqi Mengyin Village Bank has adjusted its 1-year fixed deposit rate from 1.50% to 1.45% and its 3-year rate from 1.95% to 1.85% [3][6]. Market Trends - The trend of banks discontinuing long-term deposit products is primarily observed in smaller banks, while larger state-owned and joint-stock banks still offer 5-year fixed deposits [7][8]. - The maximum term for large-denomination certificates of deposit has also been reduced, with many banks no longer offering 5-year products and only providing 1-year options [7][8]. Profitability and Cost Management - Banks are actively managing their liability costs by reducing deposit rates and discontinuing high-cost deposit products, reflecting a shift towards more precise control over their funding sources [8][9]. - The net interest margin for many banks remains under pressure, with 14 out of 26 listed banks reporting a decline in this metric [8].

Group 1 - The core issue in the banking sector in 2025 is the unexpected changes in the deposit market, leading to four peculiar phenomena for depositors [2] - The issuance of large-denomination certificates of deposit (CDs) has significantly decreased, with the interest rate for a 3-year CD dropping from 1.80% at the beginning of the year to 1.55% [3] - There is an unusual inversion in deposit rates, where some banks offer a 3-year fixed deposit rate of 1.55% while the 5-year rate is only 1.50% [6] Group 2 - There is a widening gap in deposit rates between large state-owned banks and smaller banks, with state-owned banks offering a 3-year deposit rate of 1.35% compared to 1.65%-1.75% from smaller banks [7] - Bank staff are increasingly promoting wealth management products, which offer higher annual returns of 2%-2.2% compared to traditional fixed deposit rates [10] Group 3 - The narrowing net interest margin for banks, which was 1.43% at the end of Q1 2025, has led to reduced issuance of large-denomination CDs and the inversion of deposit rates [12] - Banks are pushing wealth management products as a strategy to compensate for declining net interest income, as they seek to maintain profitability [12]

Core Insights - The A-share banking sector reported a total operating income exceeding 4.3 trillion yuan for the first three quarters, with the six major state-owned banks achieving a profit scale of 1.07 trillion yuan, indicating strong performance despite underlying structural issues [1][2] - The net interest margin (NIM) has shown signs of stabilization, yet remains at historically low levels, with retail loan delinquency rates continuing to rise, highlighting potential long-term challenges for the banking industry [1][4] Group 1: Net Interest Margin Trends - The banking sector's NIM showed a slight recovery in Q3 2025, with Jiangyin Bank reporting a NIM of 1.56%, up 2 basis points from Q2, and Ruifeng Bank at 1.49%, up 3 basis points, contributing to a 6.12% year-on-year increase in net interest income [1][2] - Despite short-term stabilization, the long-term trend of declining NIM persists, with the average NIM for commercial banks at 1.42% in Q2 2025, down 0.12 percentage points year-on-year [2][3] Group 2: Asset Quality and Retail Loan Risks - The overall asset quality of the banking sector appears stable, with most banks maintaining non-performing loan (NPL) ratios below 1.5%, but retail loans are becoming a high-risk area, with consumer loan NPL rates rising to 1.29% as of Q2 2025 [4][5] - The increase in retail loan delinquency is attributed to employment pressures affecting borrowers' income stability, leading to heightened "co-borrowing" risks, where clients with multiple loans face significantly higher delinquency rates [4][5] Group 3: Business Structure and Revenue Sources - Traditional lending remains a dominant revenue source for banks, but there is a growing need for diversification into intermediary services, as evidenced by a 4.60% year-on-year increase in net fee and commission income for A-share listed banks [6][7] - The shift towards a dual-driven model of "lending + wealth management" is essential for improving profitability in retail banking, requiring long-term customer cultivation and ecosystem development [6][7] Group 4: Non-Performing Loan Management - The improvement in NPL ratios is largely driven by increased asset disposal efforts, with a significant rise in the volume of bad debt write-offs and transfers, indicating a proactive approach to managing asset quality [7][8] - However, the reduction in NPLs does not eliminate long-term risks, particularly in the real estate sector, where NPL rates remain elevated, and smaller banks face greater challenges due to concentrated lending practices [8][9]

Investment Rating - The report indicates a cautious outlook on the credit growth rate, suggesting a shift towards quality improvement, with expectations for a recovery in corporate loan increments by 2026 [5][9]. Core Insights - Credit growth is expected to slow significantly starting in 2024, but the decline in growth rate is anticipated to moderate by 2026, with corporate loans likely to see a year-on-year increase [7][9]. - The relationship between credit growth and economic growth is weakening, emphasizing the need to optimize credit structure and reduce idle financial resources [9]. - The report highlights that the banking sector's total asset growth will outpace loan growth in 2025, driven by government bond supply and fiscal policies [9]. Summary by Sections Credit Growth Forecast - New RMB loans are projected at 21.3 trillion, 23.6 trillion, and 18.9 trillion yuan for 2022, 2023, and 2024 respectively, with a further estimate of 14.7 trillion yuan for the first three quarters of 2025 [9]. - For 2026, new loans are expected to be between 17.2 trillion and 17.7 trillion yuan, corresponding to a growth rate of 6.3% to 6.5% [9]. Loan Composition - In 2023, the total RMB loans are expected to reach 237.59 trillion yuan, with a year-on-year growth rate of 10.6% [8]. - Retail loans are projected to grow from 80.10 trillion yuan in 2023 to 82.84 trillion yuan in 2024, reflecting a growth rate decline from 5.7% to 3.4% [8]. - Corporate loans are anticipated to increase from 157.07 trillion yuan in 2023 to 171.01 trillion yuan in 2024, with a growth rate of 12.7% [8]. Regional Performance - Regions such as Jiangsu, Zhejiang, Sichuan, and Shandong are expected to continue outperforming the national average in loan growth due to strong economic performance and support from new policy financial tools [12]. Banking Sector Dynamics - The report notes that state-owned banks are expected to maintain a competitive edge due to lower funding costs and capital injections from the Ministry of Finance [12]. - The net interest margin is in a downward trend, but the rate of decline is expected to slow starting in 2025, with some smaller banks potentially stabilizing their margins by 2026 [13][17]. Asset Quality - As of Q2 2025, the non-performing loan (NPL) ratio for listed banks is reported at 1.25%, indicating a stable asset quality despite pressures on retail credit [37]. - The report emphasizes that while retail loan NPLs have increased since 2021, corporate loan clearances have improved significantly, providing a buffer against retail risks [37].

Core Viewpoint - The phenomenon of inverted deposit rates, where long-term deposit rates are lower than short-term rates, reflects the operational pressures on banks and changing market expectations, particularly affecting small and medium-sized banks [1][2]. Group 1: Deposit Rate Adjustments - Several small and medium-sized banks have recently adjusted their deposit rates, leading to instances of inverted rates, such as Shanghai Huari Bank's five-year deposit rate being 2.1%, lower than the three-year rate of 2.15% [1]. - The core reasons for the phenomenon of "three-year deposits yielding less than one-year deposits" include narrowing net interest margins and strong expectations of further rate declines, prompting banks to lower long-term product rates to avoid locking in high-cost liabilities [2]. Group 2: Market Dynamics and Competition - The current trend shows a significant outflow of retail deposits as investors prefer higher-yielding bank wealth management products, indicating a shift in investment preferences [3]. - The competition among banks is intensifying, with some banks adjusting short-term rates to maintain market share and manage funding costs amid increased deposit competition [2][3]. Group 3: Wealth Management and Product Innovation - To enhance competitiveness, banks need to focus on wealth management services, offering a wider range of products to attract depositors, including innovative financial products linked to equities and precious metals [4]. - The expectation of potential monetary policy easing, such as rate cuts, could provide a favorable environment for banks to manage their net interest margins and optimize their liability structures [4].

Core Viewpoint - Recent adjustments in deposit rates by several small and medium-sized banks have led to a phenomenon where short-term deposit rates exceed long-term rates, indicating a shift in market behavior and bank strategies in response to external pressures and internal conditions [1][2][3] Group 1: Deposit Rate Adjustments - Multiple small and medium-sized banks have announced adjustments to their deposit rates, resulting in varying reductions across different maturities [1] - For instance, Shanghai Huari Bank has set its five-year fixed deposit rate at 2.1%, which is lower than the three-year rate of 2.15%, illustrating the occurrence of "inverted" rates [1] - This inversion is attributed to banks adjusting rates based on market conditions and their operational pressures, particularly in the context of narrowing net interest margins [1][2] Group 2: Market Dynamics and Competition - The phenomenon of short-term rates being higher than long-term rates is influenced by factors such as increased liquidity pressure and heightened competition for deposits among banks [2] - As banks ramp up lending towards the year-end, the demand for funds increases, while wealth management and asset management sectors are diverting some deposits away from banks [2] - The trend of declining retail deposits is evident, with investors increasingly favoring higher-yielding bank wealth management products over traditional deposits [2] Group 3: Implications for Wealth Management - The long-term effects of interest rate cuts may encourage a shift of deposits to wealth management products, although this effect is not currently pronounced due to the limited scale of small banks' deposit bases and their slow development in wealth management [3] - Small and medium-sized banks need to enhance their wealth management offerings to remain competitive, focusing on low-risk, stable-return products [3] - Innovations in product offerings, such as equity-linked and precious metal-related wealth management products, are suggested to better serve customer needs and improve transparency in returns [3] Group 4: Future Challenges and Opportunities - Maintaining a balanced net interest margin remains a significant challenge for small and medium-sized banks, which must optimize their liability structures to reduce long-term costs [4] - Favorable market conditions, including potential monetary policy easing, may provide opportunities for banks to adjust their strategies effectively [4] - The expectation of further monetary policy support, both domestically and globally, could create a conducive environment for banks to navigate current challenges [4]

Core Viewpoint - The article discusses the recent regulatory changes in the banking sector, particularly focusing on the new requirements for insurance companies to deposit capital guarantee funds in banks with net assets exceeding 30 billion RMB, which may indicate underlying risks in smaller banks [4][8]. Group 1: Regulatory Changes - The new regulation requires insurance companies to deposit capital guarantee funds in banks with net assets of at least 30 billion RMB, increasing the threshold from 20 billion RMB [7]. - Only about 80 banks, representing 2% of the total, meet the new criteria, suggesting a tightening of the banking landscape [4]. Group 2: Banking Sector Performance - The net interest margin for Chinese commercial banks has dropped to 1.42%, with large banks experiencing even lower margins, which has led to a decline in profitability [9][10]. - The banking sector's net interest income saw a year-on-year decrease of 1.3% in the first half of the year, indicating ongoing challenges in revenue generation [10]. Group 3: Loan Quality and Risks - The non-performing loan (NPL) ratio is on the rise, particularly in the mortgage sector, where the NPL rates have tripled for major banks [13][15]. - There is a concern that the reported NPL rates may not fully reflect the actual situation, as many borrowers are struggling to meet mortgage payments due to declining property values [17][18]. Group 4: Employee Compensation and Morale - Many banks are facing financial strain, leading to reduced performance bonuses and delayed salary payments, with some employees reporting that their total compensation is now lower than that of delivery workers [32][30]. - The average salary for employees in major banks has decreased by 1% compared to the previous year, reflecting the industry's tightening financial conditions [30][31]. Group 5: Industry Outlook - The banking sector is experiencing an oversupply of banks with insufficient demand for loans, leading to increased competition and pressure on profitability [34]. - Over 300 banks have exited the market this year through mergers or closures, primarily affecting local rural commercial banks and village banks, indicating a trend towards consolidation in the industry [34].

Core Viewpoint - Industrial Bank reported its Q3 earnings, revealing a continued decline in revenue but with a narrowing rate of decrease, alongside a proposed cash dividend distribution for 2025 [2][3]. Financial Performance - For the first three quarters, Industrial Bank achieved operating revenue of 161.23 billion yuan, a year-on-year decrease of 1.82%, with the decline rate narrowing by 0.47 percentage points compared to the first half of the year [2]. - Net interest income fell by 0.56% year-on-year, while net fee and commission income increased by 3.79% [2]. - The bank's net profit attributable to shareholders reached 63.08 billion yuan, a slight increase of 0.12% year-on-year [3]. Deposit and Loan Growth - Total deposits amounted to 5.83 trillion yuan, reflecting a growth of 5.47% since the beginning of the year, with the interest rate on deposits decreasing by 32 basis points year-on-year to 1.71% [3]. - Total loans reached 5.99 trillion yuan, up 4.42% year-to-date, with corporate loans increasing by 7.54% and personal loans decreasing by 2.49% [3]. Asset Quality - The non-performing loan balance stood at 64.56 billion yuan, an increase of 30.83 billion yuan from the end of the previous year, with a non-performing loan ratio of 1.08% [4]. - The bank reported a decrease in new non-performing assets and a lower non-performing asset generation rate compared to the previous year [4][5]. Shareholder Activity - Significant shareholder activity was noted, with major shareholders increasing their stakes in Industrial Bank, including the Fujian Provincial Finance Department and other entities [5].