Core Viewpoint - The financial data for December 2025 indicates a decrease in non-bank deposits by 330 billion yuan, with a year-on-year reduction of 2.84 trillion yuan, raising market concerns about the implications for the stock market and financial institutions [1][2][3]. Group 1: Non-Bank Deposit Trends - Non-bank deposits decreased by 330 billion yuan in December, which is significantly lower than the average reduction of 532.7 billion yuan in 2022 and 2023, indicating a notable shift in market dynamics [2]. - Analysts attribute the high year-on-year reduction to a low base effect from December 2024, when non-bank deposits saw a historic drop of 3.17 trillion yuan due to regulatory changes [1][2]. - The overall non-bank deposit scale reached 34.5 trillion yuan by the end of December, accounting for 10.5% of total deposits, reflecting a slight decrease in proportion compared to previous years [2]. Group 2: Market Influences - The reduction in non-bank deposits is partly attributed to seasonal factors, such as the return of funds to deposits from off-balance-sheet products and the influence of a vibrant stock market [3][4]. - Analysts suggest that the capital market's performance, particularly the "924" market rally, has led to significant capital inflows, impacting the overall deposit landscape [3][5]. - The trend of "deposit migration" continues, but the pathways and timing of fund flows may become more complex due to varying asset return expectations and market conditions [3].

Investment Rating - The report maintains a "Strong Outperform" rating for the industry [1] Core Insights - The report discusses the historical trend of deposit migration, highlighting a shift from resident fixed deposits to non-bank and corporate demand deposits, driven by a loose monetary policy environment and the recovery of the real economy [4][12] - The report identifies two significant periods of deposit migration in the past 20 years, occurring from January 2009 to August 2011 and from March 2015 to January 2018, where the proportion of resident fixed deposits decreased significantly [12][35] - Future deposit migration trends will depend on the pace of economic recovery, with current indicators showing initial signs of deposit migration as resident demand deposits and M1 growth rates increase [4][10] Summary by Sections Section 1: Decline in Resident Fixed Deposit Proportion - Recent months have seen a decline in resident fixed deposits, with a corresponding increase in non-bank deposits, indicating a potential shift in deposit behavior [4][10] - As of November 2025, the proportion of resident fixed deposits is 36.98%, down 0.56 percentage points from the peak in April 2025, while non-bank deposits have increased by 1.13 percentage points to 10.68% [10][11] Section 2: Historical Review of Deposit Migration - The report reviews the historical context of deposit migration, noting two major phases: the first from January 2009 to August 2011, and the second from March 2015 to January 2018, where fixed deposit proportions fell significantly [12][35] - During these periods, the share of corporate demand deposits and non-bank deposits increased markedly, indicating a structural shift in deposit behavior [21][35] Section 3: Future Outlook - The continuation of deposit migration is contingent on the recovery of the real economy, with current monetary policy supporting a favorable environment for such shifts [4][12] - The report emphasizes the importance of monitoring economic indicators and the impact of monetary policy on deposit behavior, suggesting that the current trends may lead to sustained changes in deposit structures [4][12]

Group 1: Misunderstandings about Excess Savings - The market underestimates the scale of excess savings, which is greater than excess deposits, with current excess savings estimated at over 9.4 trillion yuan[2][34]. - The household savings rate has reached a near 15-year high of 29.8%, indicating a significant increase in excess savings[2][34]. - The potential scale of household savings entering the stock market could exceed 1 trillion yuan, based on historical experiences from previous bull markets[3][38]. Group 2: Misunderstandings about Market Entry Speed - The use of "non-bank deposits" to track the scale of "deposit migration" may lead to underestimations, as this figure includes interbank business disturbances[4][42]. - Non-bank deposits total approximately 35 trillion yuan, while the actual funds entering the stock market are only about 2.8 trillion yuan, indicating a mismatch in tracking methods[4][42]. - The "non-bank net liabilities" indicator provides a better tracking mechanism for household market entry, showing significant increases since September 2024[4][44]. Group 3: Misunderstandings about Investment Attributes - Unlike overseas experiences, China's excess savings since 2021 have a stronger investment attribute, primarily driven by changes in asset allocation during real estate adjustments[6][63]. - The reduction in housing expenditures has significantly contributed to excess savings, with annual housing consumption dropping from 7.7 trillion yuan to 3.1 trillion yuan by 2025[6][63]. - Areas with high excess savings are experiencing more pronounced downward pressure on housing prices, suggesting a greater urgency for asset reallocation among residents[6][69].

Core Viewpoint - The significant increase in non-bank deposits in July reflects a trend of residents shifting their savings towards financial products, influenced by the recent bullish stock market and declining interest rates [1][2][5]. Group 1: Non-Bank Deposits - In July, non-bank deposits increased by 2.14 trillion yuan, a year-on-year increase of 1.39 trillion yuan, while household deposits decreased by 1.1 trillion yuan, a year-on-year decrease of nearly 0.8 trillion yuan [2]. - From January to July, non-bank deposits cumulatively increased by 4.69 trillion yuan, which is 1.73 trillion yuan more than the same period last year [2]. - Analysts suggest that the increase in non-bank deposits is driven by the end of the mid-year bank assessment period and the recent rise in the stock market, leading to a large-scale return of household savings to financial products [2][5]. Group 2: Money Supply and Liquidity - The growth rate of M2 (broad money) in July increased by 0.5 percentage points to 8.8%, exceeding market expectations of 8.3%, while M1 (narrow money) growth rate rose to 5.6%, marking a significant rebound over three consecutive months [2]. - The narrowing of the M1-M2 spread to -3.2% indicates enhanced liquidity, suggesting that households and businesses are converting time deposits into demand deposits for consumption or investment [3]. Group 3: Capital Market Expectations - There is a strong market expectation that capital markets will become a significant outlet for household deposits, with historical trends showing that each bull market is accompanied by a migration of bank deposits to capital markets [4][5]. - The estimated maturity of fixed-term deposits is substantial, with approximately 105 trillion yuan maturing by 2025 and 66 trillion yuan thereafter, which could lead to significant liquidity impacts if these funds flow into asset markets [4]. Group 4: Monetary Policy Outlook - Despite recent market optimism, July's financial data indicates slow recovery in demand, with new credit showing a negative growth for the first time in 20 years, highlighting the core contradiction in the current economic environment [7]. - The implementation of fiscal subsidy policies is expected to reduce the need for aggressive monetary easing, with analysts suggesting that the probability of interest rate cuts may decrease due to the effectiveness of targeted fiscal measures [8].

Core Viewpoint - The decline in deposit interest rates has led to a significant "deposit migration" phenomenon, with non-bank deposits experiencing substantial growth as investors seek better returns in alternative financial products [1][2][3]. Group 1: Deposit Trends - As of the end of May, the balance of RMB deposits reached 316.96 trillion yuan, a year-on-year increase of 8.1%, with nearly 2.2 trillion yuan added in the month, which is 500 billion yuan more than the same period last year [2]. - Non-bank deposits increased by nearly 1.2 trillion yuan in May, marking a year-on-year increase of 300 billion yuan, the highest for the same period in nearly a decade [2]. - The cumulative increase in non-bank deposits this year has reached 3.07 trillion yuan, up 680 billion yuan year-on-year [2]. Group 2: Interest Rate Changes - Major state-owned banks initiated a significant reduction in deposit interest rates starting May 20, marking the first large-scale adjustment since 2025 and the seventh rate cut since October 2024 [3]. - The average interest rates for various deposit terms have fallen below 1% for short-term deposits, with the average rates for 3-year and 5-year deposits also entering the "1 era" [3]. - The average interest rates for 3-month, 6-month, 1-year, 2-year, 3-year, and 5-year deposits were reported as 1.004%, 1.212%, 1.339%, 1.428%, 1.711%, and 1.573% respectively, with significant declines observed across all terms [2]. Group 3: Factors Driving Deposit Migration - The reduction in deposit interest rates has diminished the attractiveness of bank deposits, prompting a shift towards non-bank financial products that offer relatively higher returns [1][3]. - The improvement of self-regulatory mechanisms for non-bank deposits and the ongoing regulation of wealth management products have accelerated the transfer of funds to the wealth management market [1]. - The "deposit migration" trend has been evident since last year, with two phases: the first phase involved a shift to wealth management and funds due to rising bond yields, while the second phase saw funds moving into the stock market as it began to recover [4][5]. Group 4: Impact on Financial Products - The decline in deposit rates has led to increased attractiveness of public fund products, money market funds, and insurance products, resulting in a significant shift of deposits into these financial products [5][6]. - The scale of bank wealth management has continued to grow, with a reported increase of 340 billion yuan in May, reaching 31.6 trillion yuan, further evidencing the "deposit migration" effect [6]. - Analysts suggest that the current trend of "deposit migration" may not yet be over, with expectations of continued investment in the bond market as non-bank institutions actively purchase bonds [6].