Rate rise increases margins for banks
By Zhang Fengming |
July 8, 2011, Friday
|
Print Edition
Print Edition
THE increase in interest rates will help banks expand net interest margins, Barclays Capital said yesterday.
The People's Bank of China increased the rates by 25 basis points on saving and lending rates from yesterday while demand deposits remained unchanged at 0.5 percent.
The one-year lending rate is now 6.56 percent and the one-year deposit rate is 3.5 percent.
"The structure of the hike is positive for banks' net interest margin, by increasing it on average by 1.3 basis points for 2011, and it seems as if the government is trying to avoid hurting banks," Barclays said in a report yesterday.
The structure of this hike is positive largely because of faster repricing of assets than deposits since the demand deposit rate remains the same.
The latest rate increase is different structurally from the four rate hikes between October and April, when deposit rates were raised slightly more than lending rates while demand deposit rates were raised by 0.04 percentage point and 0.1 percentage point in February and April.
The rate hike also removes market concern about a near-term asymmetrical rate hike with a greater increase in the deposit rate that would hurt earnings by banks.
"It seems like the government is trying to protect banks after recent negative news hit the sector," Barclays said.
It could trigger a short-term rally among bank shares after a sell-off over the past few weeks, said Barclays.
The People's Bank of China increased the rates by 25 basis points on saving and lending rates from yesterday while demand deposits remained unchanged at 0.5 percent.
The one-year lending rate is now 6.56 percent and the one-year deposit rate is 3.5 percent.
"The structure of the hike is positive for banks' net interest margin, by increasing it on average by 1.3 basis points for 2011, and it seems as if the government is trying to avoid hurting banks," Barclays said in a report yesterday.
The structure of this hike is positive largely because of faster repricing of assets than deposits since the demand deposit rate remains the same.
The latest rate increase is different structurally from the four rate hikes between October and April, when deposit rates were raised slightly more than lending rates while demand deposit rates were raised by 0.04 percentage point and 0.1 percentage point in February and April.
The rate hike also removes market concern about a near-term asymmetrical rate hike with a greater increase in the deposit rate that would hurt earnings by banks.
"It seems like the government is trying to protect banks after recent negative news hit the sector," Barclays said.
It could trigger a short-term rally among bank shares after a sell-off over the past few weeks, said Barclays.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 娌狪CP璇侊細娌狪CP澶05050403鍙-1
- |
- 浜掕仈缃戞柊闂讳俊鎭湇鍔¤鍙瘉锛31120180004
- |
- 缃戠粶瑙嗗惉璁稿彲璇侊細0909346
- |
- 骞挎挱鐢佃鑺傜洰鍒朵綔璁稿彲璇侊細娌瓧绗354鍙
- |
- 澧炲肩數淇′笟鍔＄粡钀ヨ鍙瘉锛氭勃B2-20120012
Copyright 漏 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
