Evaluation of loan interest rate lower limit

 

Industrial Bank chief economist Lu political commissar

 

Event.

7Month19Evening, the people's Bank of Chinese announced measures "to further promote the market-oriented reform of interest rate". The full text is as follows:

Approved by the State Council, the people's Bank of China decision, since the2013Years7Month20Liberalisation of the financial institutions loan interest rate to date.

A, cancel the lending rates of financial institutions0.7Times lower, by financial institutions based on commercial principles to determine their own loan interest rates.

Two, cancel the discount interest rate control, changing the discount rate in the rediscount rates based on some certain ways, determined by independent financial institutions.

Three, the interest rate of loans in rural credit cooperatives no longer set the upper limit.

Four, to continue to strictly enforce the differentiation housing credit policy, promote the healthy development of the real estate market, individual housing loan interest rate floating range will not be adjusted.

Release the loan interest rate overall, financial institutions and customers consultation pricing will be further expanded, to adopt differential pricing strategy to promote financial institutions, reduce the enterprise financing cost; for financial institutions to improve the ability of independent pricing, change management mode, improve service levels, increase the intensity of the resident enterprise, financial support; is conducive to optimize the allocation of financial resources, better play the role of financial support to the real economy, more force to support the economy structure adjustment and transformation and upgrading.

 

Review:

1Effects on loan pricing, the short term is not obvious

The loan interest rate lower limit to cancel, loan interest rates finally how to change depends on two aspects: one is theThe total supply of loans;TwoCredit demand negotiation skills.From the perspective of the former,At present, the total loans overall tight, therefore, does not cause significant fluctuations in the overall loan interest rates;From the latter point of view,The subject has bargaining power, the past due to regulatory restrictions, the lowest interest rate to float downward to thirty percent off only, now there is downward float lower space, this subject is mainly the central enterprises, local governments and other high credit rating firms, for other enterprises, since the interest rate is floating, and therefore the adjustment effect little.

 

Chart1 The actual loan interest rate pricing accounted for all kinds of

Data sources:CEIC, Societe generale.

 

Chart2 The loan weighted rate relative to the benchmark one-year interest rates

 

Data sources:CEIC, Societe generale.

 

From the actual situation of the current credit, according to the chart1Provide data, since this year, the loan interest rate to float downward accounted for the overall stability, floating accounted for slightly rise, while the benchmark for ratio will decrease slightly. Chart2The data was consistent with this, according to the ratio of each period we calculated weighted interest rate loans with one-year loan weighted rate, found this year compared with the second half of last year rose. That is to say,The overall situation is the current credit supply less than demand, the interest rate broke surface pressure, then open the loan limit, limited impact. Also because of this, the central bank was chosen for this, to maintain the smooth launch. But in the long term is not always the case, therefore, to cancel the loan interest rate lower limit in the long-term effect will be greater.

 

2Ratification, the market yields

This policy is the "cancel the discount interest rate control". But in the actual business, bill rate seems to be already unregulated and early operation is complete market, the adjustment is only a subsequent ratification.

Because the chart3According to data provided by,2009Years of bill financing interest rate volatility is great, but the discount rate is relatively stable, the existence of any stable relations between basic does not show two.

Chart3 Bill financing interest rate and the discount rate

 

Data sources:CEIC, Societe generale.

 

3Rural credit cooperatives, ceiling rates after the cancellation, is conducive to enhance the "three rural" and Small and micro businesses loans and can

This policy clearly announced the cancellation of the interest rate cap management of rural credit cooperatives loans, this is reasonable. Because of the "three rural" and the small micro credit risk is higher, from a global point of view, in most parts of the "three rural" and the small micro loan interest rate is more than four times the upper limit of the local policy benchmark interest rate. If the loan interest rates broke surface of not enough, make the financial institutions lack of enthusiasm on the credit, in turn caused the financial support to the real economy is insufficient. The abolition of loan interest rates, "and is conducive to the improvement of agriculture" and Small and micro businesses credit.

 

4, the benchmark interest rate loans will still exist for a long period of time

Although the cancellation of lower loan interest rates, but the benchmark lending interest rates will continue for quite a long time there. Because of this policy is clear "to cancel the loan interest rate0.7Times the limit ", and did not like the bill rate as that is to cancel the interest rate control, at the same time, this policy still said the maintenance of the housing loan interest rate control, this also means that the benchmark lending rate will still exist.

 

5Supporting measures, must further perfect

The loan interest rate lower limit, is undoubtedly a Chinese milepost significance in the process of interest rate marketization step. In order to ensure that this step can finally stable, must also be introduced other measures:

First of all, must be symmetric liberalized financial institutions on the deposit interest rate pricing autonomy. Since the loan interest rate liberalization measures as autonomy, symmetry, we must let go of the deposit interest rate pricing autonomy. This is not done, the RMB bank a reporter asked the person in charge said: "(the deposit interest rate upper limit to cancel) the required conditions are relatively higher....... The people's Bank with the relevant departments will further improve the conditions of deposit interest rate marketization foundation needed,......." The so-called the basic conditions,The first and most important, should be to ensure that financial institutions pricing is rational. At presentLoan to deposit ratioThe existence of financial institutions, the passive into rob deposit "prisoner's dilemma", can not guarantee that once the ceiling on deposit interest rate of financial institutions in the deposit interest rate pricing completely rational. Because the loans than writing the "commercial bank law", so it must be the National People's Congress law can eventually cancel;SecondIt is still the deposit interest rates have reference to a market-oriented pricing, this means that the future need to allow financial institutions to issueCD;ThirdIs to ensure that the interests of the depositors, therefore, need to establish a deposit insurance system.

Secondly, we must develop new policy benchmark interest rate.Although in the period, the benchmark interest rate loans will still exist. But from the trend, which can impact on the real interest rate level will become increasingly weak. An urgent problem then is,The central bank in the future how to guide social financing cost? This means, the establishment of a new policy of the central bank benchmark interest rates to the future. From the experience of mature market economy, the policy interest rate general to be borne by the money market interest rates.According to the situation of our country, choose overnight or seven days interest rates (short end), three monthsShibor(Zhong Changduan) has the possibility, but it requires the central bank as soon as possible openly and clearly, and immediately enhance stability overnight or seven days interest, strengthenShibor 3MCredibility.

Third, we must further deepen the reform of state-owned enterprises and the establishment of local government standard budget system. In the pricing of credit system at present, because of the central enterprises and local government not bankrupt, its position in negotiations occupy obvious advantage, which is the main beneficiaries of lower interest rates liberalization. On the other hand, private enterprises are often difficult to obtain the loan interest rate to float downward.

Fourth, we should cancel the enterprise bonds shall not exceed the amount of the net assets of the enterprise scale40%Limit. Because of the current corporate bonds (excluding short melt, ultrashort and private debt and foreign) not to exceed the net assets40%For the upper limit, therefore, for a bond and loan to enterprises, debt has become the breakthrough of loan interest rate lower limit method. For example, according to the chart4The information provided, in the2012The first half of the year, superAAAAndAAAEnterprises in the ticket expiration rate significantly lower than the same period limit loan interest rates0.7Times. Although the rate of return is not the interest rate issue expires, it suggest that issuance rates may have been slightly lower than the same period limit loan interest rates0.7Times.

 

Chart4 SuperAAAAndAAAClass ticket YTM is equivalent to5Multiple year loan benchmark interest rate

 

Data sources:CEIC, Societe generale.

Considering the bond program in any case than loans to enterprises complex, predictability is even worse, with the loan interest rate lower limit, advantage of issuing bonds in the cost will greatly abate, more40%Control limit, may make the credit status of the enterprise good return to the loan market, it has occupied the precious loan amount.

Therefore, the future should cancel the debt scale is less than the net assets of an enterprise40%Limit, also let the bond program, the degree of autonomy to further simplify the enterprise bond issuance.