Home>News Center>China
       
 

Negative interest a headache for bankers
By Chen Yao (Business Weekly)
Updated: 2004-09-19 08:52

China's commercial banks are competing head-to-head to woo depositors as the country's rising inflation is causing de facto negative interest rates, and depositors are eager to withdraw money for other financial assets.

"We are under constant pressure these days from our headquarters to maintain our current deposit bases and attract more deposits by the year's end," Zhang Lin, a sub branch manager of China Minsheng Banking Corp, told China Business Weekly.


A man counts the 100-yuan banknotes he withdrew from a bank in Haian, Jiangsu Province September 12, 2004. De facto negative interest rates compel depositors to withdraw for other financial assets. [newsphoto]
The bank's newly launched wealth management products - including those in foreign currencies featuring returns over 10 per cent - have been welcomed by customers and have helped boost the bank's deposit base, she said.

The private lender has just reported a 70-per-cent rise in net profit for the first half of this year.

Liu Mei, a senior official with the Industrial and Commercial Bank of China's Beijing branch, said in an interview with China Business Weekly that the bank has been reassigning quotas and tightening rules for the bank's sub branch staff members to entice deposits.

"Large commercial banks, as well as small ones, are now facing the same pressure to get depositors to put money in their accounts," Liu said.

The bank is planning to launch a new line of foreign exchange products that will give customers more flexibility to trade while offering high returns and low risks.

"There will probably be fierce competition among commercial lenders to attract depositors' money. All the banks are saying their products could guarantee much higher returns than time deposits," she said.

Latest statistics indicate that residents' deposits at Chinese commercial banks, including those in foreign currencies, increased 1.0387 trillion yuan (US$125.4 billion) in the year's first seven months, 130.9 billion yuan (US$15.818 billion) less than in the same period of last year.

The 14.2-percentage-point growth rate is the lowest since April 2002.

If the current trend of slowing-down deposit growth at commercial banks continues, this year will mark the first time in a decade that the country's rapid growth of bank deposits reaches a turning point, analysts said.

One important reason why the growth of deposits is slowing down is that higher price levels have stimulated domestic demands and encouraged residents to withdraw money from banks and consume, they said.

China's consumer price index (CPI) rose 5.3 per cent year-on-year in July and 3.8 per cent in the first seven months, according to figures from the National Bureau of Statistics.

Figures from the central bank also show sales of consumer goods had a year-on-year growth of 12.8 per cent for the year's first half, or 10.2 per cent after taking inflation into account.

Retail sales of consumer goods rose faster each month from January to July. The total retail sales of consumer goods reached 2.496 trillion yuan (US$354.9 billion) by July, a year-on-year rise of 12.8 per cent.

"This indicates Chinese residents have expanded consumption even when domestic price levels are growing higher," said Zhang Bin, a financial expert with the Chinese Academy of Social Sciences.

"As domestic purchasing power continues to drop, more residents are considering buying durable goods and other financial assets."

A recent survey by the People's Bank of China (PBOC), the central bank, indicates only 32.2 per cent of the surveyed urban citizens chose to save at banks in the year's second quarter, 2.5 percentage points less than those surveyed in the year's first quarter.

China's bond market has been reviving since its slump early this year because more individuals are buying bonds to gain higher returns, Zhang said.

PBOC figures show the country's treasury bonds attracted 122.7 billion yuan (US$14.78 billion) in the first six months, while life insurance products lured 178.8 billion yuan (US$21.54 billion).

"Treasury bonds offer investors higher returns than time deposits, but investors will be inevitably exposed to interest rate risk," Zhang said.

"Despite the high volatility of China's stock market, many Chinese depositors are turning to buy shares to increase returns."

By the end of July, 71.57 million investors had opened accounts in the stock exchanges in Shenzhen and Shanghai, 1.86 million more than the same time last year.

The total account invested in stocks was 35.6 billion yuan (US$4.29 billion) in the year's first half, 11.4 billion yuan (US$1.37 billion) more than the same time last year.

"Many individuals have been accessing the stock market by indirectly buying mutual fund units, which are featuring professional investment management facilities," said Liu Jingde, a senior securities analyst with Beijing Securities Co.

"So mutual funds and other investment products have also been attracting depositors to withdraw money and causing bank deposits to grow slowly."

China's investment funds collected 85 billion yuan (US$10.24 billion) in the first three months of the year, equalling last year's total. By the end of June, the funds witnessed a net increase of 132.4 billion yuan (US$15.95 billion) in the capital they are handling.

China's central bank will probably raise interest rates soon after new macroeconomic figures are released this week.

"The negative real interest rates have fuelled a bubble in the property market," said Yi Xianrong, a senior financial expert with the Chinese Academy of Social Sciences.

The property price index was up 11 per cent year-on-year in July, compared with 5 per cent in 2003.

"Higher interest rates will likely help Chinese banks to establish a footing in the competition with mutual funds and other investment companies to attract depositors' money," he said.



 
  Today's Top News     Top China News
 

Hu Jintao, new CPC military commission chairman

 

   
 

Negative interest a headache for bankers

 

   
 

China prepares for holiday passenger peak

 

   
 

Vice premier: Economic curbs are working

 

   
 

Sirens wail across China to mark 1931 attack

 

   
 

UN adopts resolution on Sudan's Darfur

 

   
  Potala Palace repairs done in Tibetan style
   
  Vice premier: Economic curbs are working
   
  More young S. Koreans opt to learn Chinese
   
  China prepares for holiday passenger peak
   
  Negative interest a headache for bankers
   
  Sirens wail across China to mark 1931 attack
   
 
  Go to Another Section  
 
 
  Story Tools  
   
  Related Stories  
   
Interest rate hike looming in China?
   
Comment: Time to rethink monetary policy
   
Interest rate hike remains uncertain
   
Experts: Interest rate rise not likely in short term
   
Rate-hike speculation swirls through nation
   
Central bank denies rumour
  News Talk  
  It is time to prepare for Beijing - 2008  
Advertisement
         
主站蜘蛛池模板: 亚洲码在线中文在线观看| 国产小视频在线免费| 两根手指就抖成这样了朝俞| 欧美人成在线观看| 午夜高清免费在线观看| 亚洲xxxx18| 天天狠狠色综合图片区| 久久国产劲暴∨内射| 欧美最猛性xxxx高清| 内射极品少妇XXXXXHD| 黄网免费在线观看| 国产黄三级三·级三级| 丁香婷婷激情综合俺也去| 日韩欧美一二三| 国产极品美女高潮抽搐免费网站| 久久国产精品只做精品| 波多野结衣欲乱上班族| 四虎电影免费观看网站| 欧美xxxx喷水| 在现免费看的www视频的软件 | 亚洲大成色www永久网址| 精品国产av一二三四区| 国产呦系列免费| 1000部精品久久久久久久久 | 国产精品永久久久久久久久久 | 国产乱子伦精品无码码专区| 亚洲香蕉久久一区二区| 国内精品伊人久久久久网站| 一本久久伊人热热精品中文| 日批视频网址免费观看| 亚洲AV无码一区东京热| 欧美精品一区二区精品久久| 免费看国产一级特黄aa大片| 老熟妇高潮一区二区三区| 国产女人乱人伦精品一区二区| 香蕉网在线播放| 国产麻豆精品高清在线播放| wwwxxxx黄色| 最近中文字幕mv2018免费看| 亚洲精品欧美精品国产精品| 精品国产免费人成网站|