On May 10, the Bank of Communications issued an announcement stating that it will terminate the Double Interest Deposit (Regular Edition/Premium Edition) business on May 15, 2024.
According to information, Shuangli Deposit is a smart financial account launched by the Bank of Communications. Its essence is an intelligent notification deposit. Currently, there are no double interest deposit products on the official website of the Bank of Communications.
Intelligent notification deposits have an automatic rollover function, which does not require regular manual operation by savers, and can automatically match the highest yield plan and obtain higher interest rates than current deposits. Smart notification deposit products have both high interest on notification deposits and the convenience of current deposits, and are very popular among user groups. At the same time, it gained customers with high interest, and once became a powerful tool for banks to collect savings. At the same time, however, it also raised capital costs in disguise for banks.
In fact, as early as May 2023, regulations required adjustments to the interest rate limits for bank notification deposits and agreement deposits. At the same time, they also required the cancellation of the smart transfer function and gave a one-year transition period.
Along with the adjustment of the self-regulation limit for agreed deposits and notification deposits, quite a few banks immediately took the lead in responding. Among major state-owned banks, ICBC, China Construction Bank, etc. immediately removed smart notification deposit products in May 2023, and only kept ordinary notification deposit products.
By 2024, the deadline was reached, and about 20 banks have successively removed smart notification deposits. In particular, in May, several banks adjusted notification deposit products, including Everbright Bank, Guangfa Bank, Bank of Xiamen, and Bohai Bank. Recently, several banks in Shandong also announced at the same time that they will end the smart transfer notification deposit service on May 15.
The reporter noticed that in addition to smart deposit notifications, products such as large deposit slips have also experienced the same situation.
On May 8, Minsheng Bank Mobile Banking stopped issuing large deposit certificates with a term of 6 months or more. There are only 2 deposit products left, 1 month and 3 month, with interest rates of 1.70%. In addition to this, a number of large and medium-sized banks, such as ICBC, Bank of China, China Construction Bank, and China Merchants Bank, have also announced that they will stop selling long-term large deposit slips.
According to Blue Whale News's observation, behind this phenomenon is that some banks have experienced varying degrees of decline in net interest spreads in recent years, leading to a decline in net profit. As a key indicator of banks' profitability, net interest spreads directly reflect the strength or weakness of banks' ability to price both assets and liabilities.
According to the annual report data, out of 42 listed banks, Bank of Qingdao had achieved net interest margin growth by the end of 2023, while Bank of Communications and Bank of Xiamen had the lowest net interest spread in this wave of delisted products, at only 1.28%. In the first quarter of this year, the net interest spread of the Bank of Commerce declined further to 1.27%.
In April 2023, in the “Qualified Prudential Assessment Implementation Measures (2023 Revised Edition)” (hereinafter: Assessment Method 2023) issued by the interest rate self-regulation mechanism, the rating criteria were set for net interest spreads: net interest spreads of at least 1.8% (inclusive) are 100 points; 0.8% (inclusive) to 1.8% ratings are 60 points (inclusive) to 100 points; and ratings below 0.8% are 0 points. As can be seen, a net interest spread of 1.8% is considered a reasonable standard for banks, while less than 1.8% indicates problems with the bank's management of assets and liabilities.
According to data disclosed by the China Financial Supervisory Authority, the net interest spreads of commercial banks for each quarter in 2023 were 1.74%, 1.74%, 1.73%, and 1.69%, respectively, and have fallen below the critical values specified by the interest rate self-regulation mechanism in the “Evaluation Measures 2023". Also, at the 2023 financial results conference of various banks, several banks revealed that reducing interest payment costs will be a top priority for this year's work.