Investment Rating - Industry Rating: Outperform the Market (maintained rating) [6] Core Insights - The report highlights the impact of stock market fluctuations on deposit flows, particularly noting that the recent stock market rally has led to a significant outflow of retail deposits into the market, especially in July 2025. This contrasts with the situation in 2021, where deposits remained stable despite stock market gains due to higher deposit rates and a more cautious risk appetite among residents [2][11][15]. - The report discusses the time effect on the loan-to-deposit spread, indicating that there is a notable increase in demand for demand deposits at month-end, which exacerbates the instability of bank liabilities. This is attributed to a surge in M1 growth and the seasonal nature of deposit inflows and outflows [3][4][23]. - Future liquidity outlook suggests that the outflow of retail demand deposits due to stock market performance will continue, putting pressure on banks' asset-liability management. The report anticipates ongoing volatility in the loan-to-deposit spread, particularly around month-end periods, and emphasizes the need for central bank intervention to maintain liquidity [5][32][33]. Summary by Sections 1. Impact of Stock Market on Deposit Flows - The stock market's upward trend has led to a significant diversion of retail deposits into the market, with a notable decline in demand deposits and a weaker growth in time deposits compared to previous years [2][11][15]. - In July 2025, retail deposits decreased by over 1 trillion, with demand deposits dropping by more than 800 billion, while non-bank deposits increased significantly [15][18]. 2. Time Effect on Loan-to-Deposit Spread - The report identifies a pronounced time effect where demand deposits surge at month-end, leading to instability in bank liabilities. This is compounded by a significant increase in M1 growth and the seasonal nature of deposit inflows [3][4][23]. - The loan-to-deposit spread is expected to experience substantial fluctuations due to these time effects, with month-end periods showing particularly high volatility [28][31]. 3. Future Liquidity Outlook - The report maintains a neutral to slightly cautious outlook for liquidity from September to Q4, anticipating that while the central bank's support will prevent severe tightening, the overall liquidity experience may be weaker compared to the second quarter of 2025 [5][32][33]. - The central bank is expected to continue its supportive measures, including potential multiple reverse repos in the coming months to counteract the liquidity pressures from the stock market and deposit flows [33].