Core Viewpoint - The banking industry is experiencing a shift away from "involutionary" competition, with initiatives being taken to address issues such as asymmetric interest rate declines and narrowing net interest margins [1][10][14]. Group 1: Industry Response - The Guangdong Banking Association held a meeting on July 17 to discuss the comprehensive rectification of "involutionary" competition, led by the association's president [4][10]. - The meeting emphasized the need for self-regulation within the industry to combat "involutionary" competition, with various committees pledging to take action [10][11]. - Ping An Bank's Guangzhou branch has actively responded to the initiative by holding a meeting to promote the anti-"involution" campaign [10][11]. Group 2: Current Market Conditions - The banking sector is facing intense competition, leading to a price war characterized by declining loan interest rates and a slowdown in net income growth [1][11]. - Consumer loan rates have dropped significantly, with some banks offering rates as low as 2.5% to 2.8%, raising concerns about profitability [11][12]. - The People's Bank of China has highlighted the disparity between the decline in loan rates and the relatively stable deposit rates, indicating severe competition within the banking sector [13][14]. Group 3: Underlying Causes of Involution - The deeper causes of "involution" in the banking sector include a lack of differentiated competition and an imbalance between supply and demand due to insufficient effective consumer demand [14][15]. - The market is increasingly dominated by traditional deposit and loan services, with banks relying heavily on net interest income, leading to similar business models and services [15][16]. - Large banks have been encroaching on the market share of smaller banks, forcing them to lower prices to maintain competitiveness, further exacerbating the "involution" phenomenon [15][16].

Core Viewpoint - The Guangdong banking industry is initiating a comprehensive rectification of "involutionary" competition through a structured system of "1+3+N" to address the challenges posed by intense market competition and declining net interest margins [1][6][7]. Group 1: Background and Current Situation - The "involutionary" competition in the banking sector is characterized by asymmetric declines in deposit and loan interest rates, leading to a continuous narrowing of net interest margins [1][7]. - The competition among banks has intensified, resulting in a gradual escalation of price wars and a slowdown in net income growth due to weakened economies of scale in loan issuance [1][7]. - The Guangdong Banking Association has convened a meeting to address these issues, with the participation of major banks like Ping An Bank, which has already taken steps to respond to the initiative [2][7]. Group 2: Regulatory Framework and Measures - The "1+3+N" system includes a negative list for comprehensive rectification issued by regulatory authorities, a self-discipline convention, an initiative letter, and a commitment letter from the banking association, along with various self-regulatory measures across related business areas [6][7]. - The meeting emphasized the importance of self-regulation within the industry to combat "involutionary" competition and promote sustainable development in the Guangdong banking sector [7]. Group 3: Market Dynamics and Interest Rates - The external manifestation of "involution" in the banking industry is most evident in the declining interest rates for loans and deposits, particularly in consumer loans, which have seen rates drop below 3% [8][9]. - The competition has led to some banks offering consumer loans at rates as low as 2.5% to 2.8%, prompting concerns about profitability [8]. - The People's Bank of China has highlighted the rapid decline in loan rates compared to deposit rates, indicating a significant deviation from policy interest rate adjustments due to fierce market competition [9][10]. Group 4: Challenges and Recommendations - The deeper causes of "involution" include a lack of differentiated competition among banks, an imbalance between supply and demand, and a concentration of market share among a few large banks [10][11]. - Recommendations for addressing these challenges include encouraging banks to reshape their operational philosophies, explore differentiated competition models, and enhance risk management practices [11].