The year-on-year decrease in deposits in July or the return to wealth management has weakened the demand for preventive savings among residents
In July, RMB deposits showed a year-on-year decline trend, while the wealth management market experienced a certain seasonal decline at the end of June and then heated up in July.
Against the backdrop of the continuous decline in bank deposit interest rates in recent times, the market's attention to wealth management is increasing. Market analysis generally believes that in July, deposits decreased significantly compared to the same period last year. In addition to early repayment of loans driving a decrease in deposits, this phenomenon also reflects signs of residents shifting from financial deposit oriented to deposit oriented, leading to a decline in their willingness to save. Looking ahead to the second half of the year, the overall scale of wealth management is likely to recover to over 29 trillion yuan.
Year-on-year increase or decrease in resident deposits
According to central bank data, RMB deposits decreased by 1.12 trillion yuan in July, a year-on-year increase of 1.17 trillion yuan. Among them, household deposits decreased by 809.3 billion yuan, non-financial enterprise deposits decreased by 1.53 trillion yuan, fiscal deposits increased by 907.8 billion yuan, and deposits from non banking financial institutions increased by 413 billion yuan.
Based on comprehensive market analysis, the significant contraction of RMB deposits is partly due to seasonal characteristics, but the year-on-year increase or decrease to a certain extent reflects a decline in residents' willingness to save, or is due to a rise in risk appetite and low deposit interest rates.
The Chief Economist of CITIC Securities clearly believes that the year-on-year decline in household deposits in July is due to factors such as the return of funds on the balance sheet at the beginning of the quarter for wealth management, as well as the weakening of residents' demand for preventive savings in the context of lower deposit interest rates and increased consumer investment opportunities. The increase or decrease in corporate deposits in July may be related to a decline in loan financing. In addition, as a major tax month, July saw a seasonal increase in fiscal deposits driven by tax revenue, and under the influence of last year's low base, there was a significant year-on-year increase.
Wang Yunjin, a senior researcher at the Zhixin Investment Research Institute, believes that early repayment of loans is driving down savings for residents and businesses. In July, deposits decreased by over 1.1 trillion yuan, and the balance growth rate decreased by 0.5 percentage points to 10.5%. Among them, the deposits of residents and non-financial enterprises decreased by 471.3 billion yuan and 490 billion yuan respectively year-on-year, with residents and physical enterprises returning loans in advance, reducing renewal loans, or reducing new loans. The newly added fiscal deposits amounted to 907.8 billion yuan, an increase of 421.5 billion yuan year-on-year. The government needs to continue to increase its expenditure. Non bank financial institutions saw an increase of 413 billion yuan in deposits, a decrease of 391.5 billion yuan compared to the same period last year. This is in stark contrast to the increase in non bank loans compared to the same period last year, indicating that the pressure to redeem funds for wealth management and other activities is still high.
The wealth management market is heating up
Although there are different opinions on whether the decrease in deposits is due to early repayment of loans or inflow into wealth management, it is worth noting that while deposits decreased significantly year-on-year, the wealth management market showed signs of warming up in July after a certain seasonal decline at the end of June.
According to Ming Ming's calculations, the scale of wealth management in July 2023 increased by 1.88 trillion yuan to 27.22 trillion yuan month on month, with a growth rate of 7.42%, reaching a new high in two years.
Wang Yifeng, Chief Analyst of the Banking Industry at Everbright Securities Research Institute, believes that with the rapid return of wealth management products represented by the daily open product line after the cross season, the scale of wealth management quickly rebounded to around 27 trillion yuan at the end of July, and the scale of wealth management increased by about 100 billion yuan in the first week of August.
Previously, multiple securities analysts also predicted that in the first week of July, the scale of bank wealth management had resumed growth of over 800 billion yuan. For example, a research report released by CICC shows that the scale of bank wealth management has increased by 1.07 trillion yuan in early July, showing a positive recovery trend; According to a research report by Guangfa Securities, as of July 14th, the stock size of bank wealth management products increased by 332.4 billion yuan to 26.93 trillion yuan compared to July 7th, with the size of wealth management sub products increasing by 367.4 billion yuan to 22.71 trillion yuan compared to July 7th, continuing the rebound trend after the decline in scale at the end of the quarter.
Looking ahead to the second half of the year, market analysis suggests that the downward trend in deposit interest rates is driving residential funds back into wealth management products from deposits, and the scale of bank wealth management will gradually rebound.
"The scale of excess savings accumulated by residents returning to consumption in 2022 is relatively limited, and real estate is also difficult to increase in volume, with a relatively small effect on savings diversion. Coupled with the continuous pressure on on on balance sheet deposit interest rates by regulation, the cost-effectiveness of wealth management continues to improve, and the probability of excess savings returning to bank wealth management is increasing. It is expected that the pressure of" asset shortage "may help strengthen the bond market.". Based on historical data and the practice of investing in wealth management, it is expected that the growth rate of wealth management scale will be around 400 billion yuan in August, and the overall scale of wealth management may recover to over 29 trillion yuan in the second half of the year.