The central bank clearly stated that the next step for financial institutions is to enhance their autonomous 'rational' pricing capabilities to more reasonably respond to market demand and risks. In addition, the central bank pointed out that further interest rate adjustments are subject to dual constraints of net interest margin and exchange rates, especially the restrictions from internal and external pressures.
Fintech APP learned that Zhongtai Securities released research reports stating that the current market preference is to increase + there are differences in future economic expectations phase. The financial policies are relatively strong, firmly adhering to a supportive monetary policy stance, paying more attention to price-based indicators. Currently, there is a significant deviation between deposit and loan interest rates and policy interest rate adjustments. The central bank has taken multiple measures to facilitate interest rate transmission mechanism, maintain competitive order and interest rate policy implementation, stabilize banks' net interest margins.
Zhongtai Securities' main points are as follows:
Overall train of thought: Adhere to a supportive monetary policy stance, paying more attention to price-based indicators.
(1) The financial policies are relatively strong, firmly adhering to a supportive monetary policy stance. The report emphasizes the adherence to supportive monetary policy, increasing the intensity of monetary policy regulation. The monetary policy tone continues to be 'flexible and moderate, precise and effective.' The bank believes that the financial policy will continue to maintain a fully positive attitude, meanwhile, fiscal policy may have a greater impact compared to monetary policy.
(2) Downplaying quantity targets, emphasizing price targets: Promoting a reasonable rebound of prices; facilitating interest rate transmission mechanism to stabilize the interest margin. Appropriately narrowing the corridor width of interest rates: The central bank in the report added the expression 'enhancing the precision of monetary policy,' and stated that in the next stage, it will gradually downplay the focus on quantity targets, align with international experience, and gradually strengthen the price control mode.
Facilitating interest rate transmission mechanism to stabilize the interest margin: There is a significant deviation between deposit and loan interest rates and policy interest rate adjustments, mainly due to intense market competition and severe 'internal circulation' within banks. The central bank has taken multiple measures to facilitate interest rate transmission mechanism, maintain competitive order and interest rate policy implementation, stabilize banks' net interest margins. At the same time, promoting a reasonable rebound of prices is regarded as an important consideration in grasping monetary policy.
Credit Policy:
(1)Optimizing the credit structure, focusing on five major aspects, with technology finance taking the lead among the five major aspects. This year, the construction of technology financial service capability has achieved positive results: the policy framework continues to be sound, optimizing the regional layout of technology finance. Financial policy tools are more comprehensive and precise. By the end of September, the balance of medium and long-term loans in the manufacturing industry increased by 14.8% year-on-year, which is 6.7 percentage points higher than the overall loan growth rate. In terms of inclusive finance, actively utilizing re-lending and rediscounting to guide local financial institutions to expand credit provision for agriculture, small and micro enterprises, and private enterprises. By the end of September, the balance of inclusive micro-loans increased by 14.5% year-on-year, which is 6.4 percentage points higher than the overall loan growth rate.
(2)Real Estate: Promoting the stabilization of the real estate market. There is a significant enhancement in the expression related to real estate, with almost all statements in the report being revised. It is stated that efforts will be made to promote the implementation and effectiveness of incremental financial policies in real estate, guide financial institutions to strengthen financial support, meet the rigid and diversified housing needs of urban and rural residents, actively support the acquisition of existing commercial housing for affordable housing, and support the activation of idle land.
Interest Rate Policy: Smooth transmission mechanism of interest rates, focusing on the net interest margin of banks.
(1)Diminishing quantity targets, improving the statistical scope of money supply. Personal demand deposits, and non-bank payment institution reserves are included in the M1 statistics, and the M2 statistics are adjusted in a timely manner in combination with the development changes in financial tool liquidity.
(2)Facilitating the transmission mechanism of interest rates, the phenomenon of internal pricing spiral of bank deposit and loan interest rates has attracted the attention of the central bank. The central bank clearly stated that in the next step, financial institutions should enhance their independent and rational pricing capabilities to respond more reasonably to market demand and risks. In addition, the central bank pointed out that further interest rate cuts face dual constraints of the net interest margin and exchange rates, especially the restrictions from internal and external pressures.
(3)The weighted average interest rate of general loans has stabilized, with still significant reductions in enterprise loan interest rates.
Investment Recommendations: Key recommendations include high-quality city and rural commercial banks with debt yield, selecting city and rural commercial banks with large fundamental certainty and cheap valuation.
The bank continues to recommend Bank of Jiangsu (600919.SH), Chongqing Rural Commercial Bank (601077.SH), Shanghai Rural Commercial Bank (601825.SH), Bank of Qilu (601665.SH), Jiangsu Changshu Rural Commercial Bank (601128.SH);
If the economic outlook continues to improve, recommend core assets in banks: Bank of Ningbo (002142.SZ), CM Bank (600036.SH), Industrial Bank (601166.SH);
In the case of weak economic recovery and benefits from debt-to-equity swaps, high dividend yield varieties, recommend large banks: Agricultural Bank of China (601288.SH), Bank of China (601988.SH), Postal Savings Bank of China (601658.SH), Industrial and Commercial Bank of China (601398.SH), China Construction Bank Corporation (601939.SH), Bank of Communications (601328.SH), etc.
Risk alert: If policy implementation falls short of expectations, economic downturn exceeds expectations.
