news

한어Русский языкEnglishFrançaisIndonesianSanskrit日本語DeutschPortuguêsΕλληνικάespañolItalianoSuomalainenLatina

stable high interest rates are becoming less and less common

"i stayed up until midnight for two consecutive nights, but it was still sold out in seconds. it felt harder than drinking feitian moutai."

wang lu (pseudonym) lamented helplessly on the social platform, and netizens in the comment section also felt the same way: "i tried to grab it for a week but couldn't get it" and "it was sold out in 1 second just after it opened at 12 o'clock"...

what makes them stay up late is not the concert tickets or high-speed rail tickets, but the large-denomination certificates of deposit with an interest rate of 3% that webank sells in limited quantities every day.

in order to grab this large-denomination certificate of deposit, wang lu put in a lot of effort: using wifi network and standing next to the router; specially downloading a timing app that can be accurate to 0.1 seconds, and clicking on the reservation page at around 23:59:58:05...but still missed it.

picture/screenshot of the large-denomination certificates of deposit sold out page

"times have really changed. back then, we were hesitant about the 4.2% interest rate, but now we have to rely on our hand speed to get a 3% interest rate at 12 o'clock in the middle of the night." wang lu smiled bitterly.

behind the crazy rush for large-denomination certificates of deposit, deposit interest rates are constantly falling. with the implementation of a new round of deposit interest rate adjustments in july this year, bank deposit interest rates have entered the "1" era. many banks have removed large-denomination certificates of deposit from their shelves, and interest rates of 2% are rare.

faced with the increasingly scarce high-yield large-denomination certificates of deposit, many people are stuck waiting for their bank apps, lamenting that they are “gone in seconds”; some people fly to open accounts in other places to deposit money and become “deposit special forces”; there are even “scalpers” who charge handling fees and snatch large-denomination certificates of deposit on behalf of others.

large deposit certificates are selling like crazy

large-denomination certificates of deposit refer to large-denomination certificates of deposit issued by banking deposit-taking financial institutions. compared with traditional bank deposits, large-denomination certificates of deposit have a high investment threshold (usually starting from 200,000 yuan), an integer amount, a term of no less than 7 days, and generally have a higher interest rate than time deposits.

lou feipeng, a researcher at the postal savings bank of china, told china newsweek that compared to time deposits, large-denomination certificates of deposit also have a transfer function, which can realize flexible cash conversion and reduce interest losses from early withdrawals.

however, it is not easy to buy large-denomination certificates of deposit with "ideal interest rates". the interest rates of three-year large-denomination certificates of deposit of major banks in the market are mostly in the range of 2%-2.5%, and some three-year large-denomination certificates of deposit of banks such as china construction bank, industrial and commercial bank of china, and agricultural bank of china are often "sold out" or insufficient.

based on this, the transfer of large-denomination certificates of deposit once became a "hot commodity". in fact, every bank's app has a large-denomination certificate of deposit transfer service area, which is intended to provide services for investors who want to transfer large-denomination certificates of deposit in advance. they only need to indicate the amount, interest rate and term.

however, the annual interest rates of these large-denomination certificates of deposit after transfer are mostly lower than the original annual interest rates, and the face value is often millions. china news weekly browsed the large-denomination certificate of deposit transfer area of ​​the industrial and commercial bank of china app and found that the annual interest rate of a large-denomination certificate of deposit with an annual interest rate of 3.1% was reduced to 2.28% after transfer, and the purchase amount was as high as 10.57 million yuan.

figure/app page screenshot

many investors have also turned their attention to small and medium-sized banks.

compared with the large-denomination certificates of deposit of big banks whose two-year interest rates have fallen below 2%, the three-year interest rates of many small and medium-sized banks can reach 3.25% at one time, and gifts are given away; and the upper limit of the interest rate for large-denomination certificates of deposit of some village banks is even higher, such as the five-year interest rate of oriental huifeng village bank can even reach 4%.

september is the month when account managers are tasked with attracting deposits. account managers of some local small and medium-sized banks will also "promote" their own large-denomination certificates of deposit on social platforms, leaving place names and interest rates in comments. a bank account manager at guiyang bank even said bluntly: with just a high-speed rail ticket, a 1% higher interest rate is not a problem.

photo/oriental huifeng rural bank leaflet

however, it is not possible to open an account online for large-denomination certificates of deposit through small and medium-sized banks, and you can only go to the local counter to handle it. in january 2021, the financial management department issued the "notice on regulating commercial banks' personal deposit business via the internet", which strictly limits commercial banks' internet time deposit business to self-operated online platforms, and requires local banks to conduct internet deposit business based on serving customers in the area where the institution is located.

a customer manager of qingdao bank told china news weekly that the bank's large-denomination certificate of deposit account opening requires on-site processing. many out-of-town customers go to qingdao, shandong to handle it, and then contact remotely.

however, cross-city deposits are not foolproof. "cross-city deposits are legal, but depositors should also be aware of the risks and go to bank counters to handle them. do not participate in activities such as high-interest deposits and 'interest subsidies'," said dong ximiao, chief researcher at ccb.

a customer manager of a city commercial bank in sichuan told china news weekly that depositors need to do their homework in advance to open accounts and make deposits in other places. at present, due to the surge in the number of account openings in some city commercial banks, certain restrictions have also emerged. under the supervision of anti-money laundering, some banks are more stringent in the review of account opening, and more information needs to be prepared; on the other hand, due to account limit issues, some city commercial banks may not open a large amount of online transfer functions (mobile banking, online banking, etc.) for new cardholders, which may easily lead to the problem that depositors can easily deposit money but have trouble withdrawing money.

"more than 3% depends on snatching"

in addition to the large-denomination certificates of deposit of local banks, the interest rates of some large-denomination certificates of deposit of some private banks are also quite impressive. although there is no geographical restriction, such certificates of deposit are generally issued in "limited quantities" and need to be waited for.

a "deposit intermediary" told china news weekly that webank's five-year large-denomination certificates of deposit with an interest rate of 3% are released in a fixed amount at 12:00 a.m. every night; zhongbang bank's five-year certificates of deposit with an interest rate of 3.15% are snapped up at 8:00 a.m. every day.

not only that, private banks also have their own "hidden ways of playing". according to the above-mentioned deposit intermediary, new customers of zhongbang bank can even get a high interest rate of about 4% if they open an account and deposit for 5 years. "but it is usually not written on the surface. this is the total interest rate after conversion. for example, a certain five-year product belongs to the calculation formula of '2.45+1.5 growth value interest rate'. points can be exchanged by completing tasks and other methods, and the points can be spent as money."

the convenience of not having to go to the counter has also given rise to the phenomenon of "scalpers" buying certificates of deposit for others. although the relevant banks have also taken certain risk control measures, and set up verification codes and facial recognition in the process of buying certificates of deposit, there are still scalpers who say they have an opportunity to take advantage of it. china news weekly learned that there are mainly two types of large certificates of deposit that scalpers are eyeing: one is the large certificates of deposit that are transferred by "picking up leaks"; the other is the large certificates of deposit that are issued on the bank's app for a limited time.

however, there are considerable risks in robbing on behalf of others. depositors need to provide the scalpers with detailed bank account information, including login passwords, so that the scalpers can do the operation on their behalf.

in this regard, lou feipeng pointed out that grabbing large-denomination certificates of deposit on behalf of others is itself non-compliant. "if investors need to provide scalpers with their own account information, or hand over their accounts to scalpers, there may be risks of information leakage and fund security."

in fact, although the interest rate of large-denomination certificates of deposit is high, the deposit is not a small amount after all. in addition to the interest rate, the quality and service of the bank are also important considerations.

recently, li hui (pseudonym) wanted to buy a large-denomination certificate of deposit of 200,000 yuan. she did not look for local small and medium-sized banks or private banks, but chose china merchants bank, a well-known domestic joint-stock bank, even though its two-year interest rate was only 1.95%.

li hui attributed her choice of a large bank to "buddhism". "i already have a savings card from china merchants bank, which saves me the trouble of opening an account. more importantly, the endorsement of a large bank makes me feel at ease."

wang lu, who is obsessed with buying webank's large-denomination certificates of deposit, also has some confidence. in her opinion, after all, large-denomination certificates of deposit are clearly stipulated to be protected in accordance with the deposit insurance regulations. the regulations clearly state that deposit insurance is subject to limited compensation, with the maximum compensation limit being rmb 500,000.

of course, buying large-denomination certificates of deposit also depends on one's own situation. lou feipeng pointed out that when investing in large-denomination certificates of deposit, investors need to consider factors such as their own investment period, daily consumption needs, and the starting amount of large-denomination certificates of deposit, and make reasonable and rational investments.

photo/visual china

will deposit rates fall further?

behind the attention paid to large-denomination certificates of deposit, the unit returns brought by bank deposits, as an almost risk-free money management model, are indeed shrinking in the interest rate cut cycle.

on july 25, the state-owned banks adjusted their deposit rates for the first time this year, lowering the 3-year and 5-year fixed deposit rates by 20 basis points. earlier, on september 1 and december 22, 2023, the state-owned banks lowered the 3-year and 5-year fixed deposit rates by 25 basis points respectively.

at present, deposit interest rates have already dropped to a low point. take the representative five-year fixed deposit rate as an example. before the adjustment in july, it could barely maintain the "2" figure, but after the adjustment, it dropped completely: most state-owned banks dropped to 1.80%, and most joint-stock banks dropped to 1.85%.

not only that, after the state-owned and joint-stock banks lowered their listed deposit rates, most city commercial banks, village banks, etc. also followed suit, and the reduction was not small.

especially recently, private banks that have always offered high interest rates have also joined the interest rate cut camp. since the end of august, webank, mybank, liaoning zhenxing bank and many other private banks have lowered the interest rates of some term deposits, with the adjustment ranging from 10 to 30 basis points.

as interest rates generally drop to the "1" digit, the income from deposit rates feels quite "useless".

in the context of low interest rates, the high interest rates of large-denomination certificates of deposit provide a rare sense of certainty. in fact, it is not that li hui is not tempted by the 3% deposit rate, but she has always been skeptical.

in fact, li hui often receives loan calls. the personal loan interest rates of some banks for new users generally fall below the "3" digit or even the "2" digit, which makes her naturally wary of deposit interest rates above 3%.

“can banks still make money?”

the interest rate difference between deposits and loans has become a key question for the banking industry. at present, china's banking industry makes more money by the difference in interest income between loans and deposits. this profitability is reflected in the financial report as "net interest margin". according to data from the state financial supervision and administration bureau, the net interest margin of commercial banks in the second quarter of this year was 1.54%, the same as in the first quarter, but still far from the warning level of 1.8%.

in order to support the real economy and reduce fees and profits, the lpr (loan market benchmark rate) has been continuously lowered in recent years, and banks are continuously lowering loan interest rates. under cost pressure, lowering deposit rates has become a necessity to protect net interest margins.

depositors' deposits are reflected in the form of liabilities in the bank's balance sheet. in order to ease the pressure, banks are competing to strengthen the refined management of liabilities and strictly control the proportion of high-cost deposits. the limited issuance and pre-booked issuance of many large-denomination certificates of deposit are precisely the considerations of banks to avoid "interest subsidies" and actively reduce liability costs.

in the future, deposit rates may still be "one step lower". dong ximiao told china news weekly that, in general, commercial banks will continue to lower deposit rates in 2024 to further reduce funding costs and ease the pressure of narrowing interest rate spreads. "in addition to lowering deposit rates, commercial banks should also reduce interest subsidies for deposits and fees other than interest to further reduce the hidden costs of deposits."