The era of "lying flat and earning interest" has come to an end.

Banks have taken action to prevent any money from "earning while idle," driving down deposit interest rates!

In the latest round of interest rate cuts, both state-owned banks and 12 joint-stock banks have reduced the interest rate on demand deposits by 5 basis points, leaving only 0.15%.

——For demand deposits, interest has already "fallen to zero."

More symbolically, the five-year fixed deposit rate, which could barely hold on to the "2" figure, has also completely broken down this time: most state-owned banks have reduced it to 1.80%, and most joint-stock banks have reduced it to 1.85%.

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The interest rate on deposits has comprehensively entered the "1" era, which is already the lowest level since the founding of the country.

However, paradoxically, the money that the entire nation has in banks is increasing!

In the first half of this year, RMB deposits continued to increase by 11.46 trillion, of which household deposits increased by 9.27 trillion.

The balance of household deposits has once again reached a historical high of 147.48 trillion.

On average, the per capita deposit balance of the entire nation has exceeded 100,000 yuan.

A simple calculation shows that from January 2020 to now, in just four years, Chinese people have saved an additional 61.38 trillion!

Why, on one hand, are deposit interest rates plummeting, while on the other hand, people are still desperately saving money?

Why, looking at the world, are deposits heading towards "zero interest rates," or even "negative interest rates"?

Are you ready to welcome an era of "zero interest rates" for deposits?

The wave of deposit interest rate cuts is still accelerating.

In this latest wave, it is more intense than ever before.

On July 25, the Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank, Bank of Communications, and Postal Savings Bank of China, the six major banks, simultaneously released information, lowering the deposit rates: after adjustment, the interest rate on demand deposits was reduced from 0.20% to 0.15%.

In fixed deposits, the three-month, six-month, and one-year fixed deposit rates of the Industrial and Commercial Bank of China, Agricultural Bank of China, China Construction Bank, Bank of China, and Bank of Communications all fell by 10 basis points, to 1.05%, 1.25%, and 1.35% respectively; the two-year, three-year, and five-year fixed deposit rates fell by 20 basis points, to 1.45%, 1.75%, and 1.8% respectively.

Unconsciously, the deposit interest rates of state-owned large banks have fully entered the "1" era!

Friends who are a bit older should remember that about 30 years ago, if you walked into a bank, you would see the interest on a five-year fixed deposit at around 14%.

If you deposited 10,000 yuan for five years, you would get an interest of up to 7,000 yuan.

Today?

With the same deposit method, after five years, you can only get an interest of 900 yuan.

In fact, our current deposit interest rates are already at the lowest level since the founding of the country and continue to decline.

After the six major banks, joint-stock banks and small and medium banks have also followed suit, faster than ever before.

In the past, each round of deposit interest rate cuts, from the six major banks to small and medium banks, generally took several months to half a year.

But this time, it was almost synchronized.

Just after the state-owned large banks announced the interest rate cut on July 25, just entering August, including Shanghai Bank, Suzhou Bank, Ningbo Bank, Xiamen Bank, Changsha Bank, Hunan Bank, Chongqing Bank and other city banks have taken action.

Subsequently, about 10 small and medium banks including Leizhou Rural Commercial Bank, Guilin National Village Bank, and Yuzhou Rural Credit Cooperative Union successively announced a reduction in deposit interest rates.

Despite the pressure to attract deposits, their deposit interest rates have generally bid farewell to the "3" era.

This "race" speed is really unusual.

30 years ago, we learned to get used to 13.86%, 10 years ago, we learned to get used to 4.75%, in recent years, we learned to get used to 2%, now, the era of deposit interest rates in the "1" era has become the norm.

The era of "lying flat" on interest income has gone forever.

Saving money has become an increasingly unprofitable thing.

Over the years, interest rates have been falling, what does the central bank want to do?

Residents accelerate deleveraging.

The answer is actually very simple.

The reduction of interest rates is one of the most commonly used policy tools when the central bank actively regulates the market.

In the recent rounds of cuts, the reduction of long-term fixed deposit interest rates is usually the largest.

The most direct purpose is to reduce the national savings rate and let people take out money to consume or invest to boost the economy.

And there is another important reason why this round of deposit interest rates has fallen so urgently, which is that the net interest margin pressure of banks is too great.

The so-called net interest margin is mainly affected by the interest spread between bank deposits and loans, which can be simply understood as the size of the bank's profit margin.

In the second quarter, the net interest margin of Chinese commercial banks was 1.54%, the same as the first quarter, lower than the warning level of 1.8%, and at a historical low.

In the first half of this year, the net interest margin of many listed banks has broken through the historical low: Xi'an Bank, the net interest margin level at the end of the second quarter fell to 1.21%, the first time it fell below "1.3%"; Shanghai Bank, the net interest margin in the first half of the year fell below "1.2%" for the first time; Xiamen Bank, the net interest margin in the first half of the year fell below "1.2%" for the first time, only 1.14%, which is the lowest level among the current listed banks.

The pressure is great, reducing deposit interest rates can reduce losses, especially for some small and medium banks, it may save a key "life-saving money".

At present, the pressure to "fight the economy" is largely on the shoulders of banks.

Just last Friday, A-shares rose sharply, and the market spread the news that the relevant parties are considering further reducing the existing housing loan interest rates, allowing a scale of up to 38 trillion yuan of existing housing loans to seek mortgage transfers, in order to reduce the debt burden of residents and stimulate consumption.

Taking Guangzhou as an example, now some banks have even achieved a new loan interest rate of 2.89%!

You know, the provident fund loan interest rate is only 2.85%.

The existing housing loan interest rate must be reduced, which is the current "fighting economy", stimulating consumption, reducing deposits, and "key move", it is imperative.

This is because, under the condition of declining income and unstable expectations, the "pain index" brought by housing loans has been greatly magnified, and repaying housing loans has become a collective unconscious action of people seeking a sense of security.

In May of this year, the topic of "this generation of young people do not want to work for banks" topped the Weibo hot search.

The Extreme Vision News reported a case, Yang Li, who works in a bank, worked together with his family to repay a mortgage loan of 1.4 million yuan, thus saving an interest of 1.476 million yuan.

The news wrote that after successfully achieving "0 repayment", Yang Li felt that life was full of motivation.

Because of this, the existing housing loan interest rate must be reduced to prevent more people from repaying loans in advance.

The rumor is very likely to be true.

But in this way, for banks of all sizes, the loan interest rate has fallen, and the deposit interest rate must also be reduced accordingly.

The result is: banks continue to cut interest rates, and the people continue to save money.

This round of interest rate cuts will not easily stop before reaching the policy expectations.

After all, the savings willingness of residents has not yet seen a sign of peaking.

Despite the continuous decline in deposit returns, people's savings willingness has actually increased.

The central bank's first quarter of 2024 "Urban Depositor Questionnaire Survey Report" shows: residents who tend to "consume more" account for 23.4%, basically the same as the previous quarter; residents who tend to "save more" account for 61.8%, an increase of 0.7 percentage points from the previous quarter; residents who tend to "invest more" account for 14.9%, a decrease of 0.7 percentage points from the previous quarter.

In addition, the "two engines" that have been driving the growth of bank credit for a long time, real estate and infrastructure, have already run out of steam.

In the first half of this year, the national real estate development investment was 525.29 billion yuan, a year-on-year decrease of 10.1%.

From the loan data, as of the end of the second quarter of 2024, the national personal housing loan balance was 37.79 trillion yuan, a year-on-year decrease of 2.1%.

The slowdown of government infrastructure also determines that the prospects of the credit market in the next few years will not be too optimistic.

At the beginning of this year, the State Council required 12 high-risk debt provinces to fully suspend infrastructure projects other than basic livelihood projects.

It can be seen that the country is serious about resolving the debt risks of local governments.

However, this also means that many joint-stock banks and local banks will find it difficult to get new municipal loans in the next few years.

In this macro-deleveraging cycle, banks must endure and survive, which is no less than a "trial".

Will the "zero interest rate" era come?

Has China's deposit interest rate cut bottomed out?

Will the "zero interest rate" era come?

Compared with the main economies of the world, China's deposit interest rate obviously still has room to continue to explore.

In 2008, when the United States fell into the subprime mortgage crisis, the Federal Reserve once allowed the federal funds rate to remain at 0.25% for about 7 years, until 2015, it gradually raised interest rates.

In June 2014, in order to deal with the European debt crisis, the European Central Bank even announced the implementation of a negative interest rate policy, lowering the deposit interest rate to -0.1%.

The deposit interest has really "fallen to zero".

Neighboring East Asia, Japan, when it encountered an economic bubble crisis in the 1990s, also adopted a similar zero interest rate policy, followed by the "lost thirty years".

...

The People's Bank of China, which has always been known for its stability, is unlikely to allow deposit interest rates to enter the "zero interest rate" or even "negative interest rate" era in a short period of time.

However, gradually "taking small steps and running fast" to reduce deposit interest rates is a high probability event.

The most important reason is that under the current economic situation, it is not a one-time effort to reverse expectations.

The whole people are de-leveraging, reducing debt, increasing deposits, and the desire for expansion is not strong.

Trust explosions, falling house prices, and the stock market has been fighting to defend 3000 points...

The stock market and the real estate market are calm (a high emotional intelligence saying), then continue to save it.

At least the money in the bank will not suddenly halve.

At least, it will not lose the principal.Nowadays, even the last line of defense for regular savings is on the verge of being breached.

The "deposit dilemma" faced by ordinary people seems to be truly unsolvable.

In June of this year, the growth rate of narrow money supply M1, an indicator reflecting the cash and demand deposits of enterprises and individuals, fell by 5% year-on-year, marking the first time on record that it has experienced negative growth for three consecutive months.

The acceleration of residents' deposits flowing into fixed savings is not a good sign for boosting the economy, but for individuals, it is a helpless choice.

Is it really impossible for ordinary people's wallets to defy fate?

Not necessarily, at least we can find some answers from the case of Japan.

Data shows that in the fiscal year of 2022, cash and bank deposits accounted for 54% of Japanese household asset allocation, insurance and pensions accounted for 26%, and bonds accounted for only 1%.

This is very similar to the habit of Chinese families who love savings.

However, unlike China, Japanese financial management, while pursuing safety, also focuses on diversified investment, increasing investment in overseas stocks and bonds.

The "Mrs. Watanabe" who rely on the low interest rates and long-term depreciation of the yen to carry out yen carry trade is a successful case.

In the era of low interest rates, individual investors must also change their strategies.

First, avoid excessive leverage.

Using today's low-interest loans to repay past high-interest debts is also a good strategy.

Second, maintain a balance in asset allocation.

Retain a certain proportion of "safe assets" and maintain a certain proportion of high volatility assets, so that there is room for maneuver between economic shocks.

Moreover, pay attention to overseas investment opportunities.

Only by looking at the big world can we have the possibility of outperforming our contemporaries.

History will not simply repeat itself, but those who are ahead of the times can always learn something from history.