There is a continuing downward trend in the middle-level rate of return, and there is a gap in the rate of return associated with different targets.

The downward trend in interest rates in some banks has continued since the second quarter, while deposit products have not been “windled”. In addition to large deposit sheets and fixed-term deposits, structural deposits are also favoured by a number of sound investors.

“Despite the current reversal of the interest rates for structural deposits, the choice of time-frames for other deposit products is more flexible than that for other deposit products, with the possibility of obtaining higher yields in a shorter period of time, more appropriate for my current needs.” On 5 May, Ms. Cheng Jingye informed the press.

Structural deposits received attention

Unlike general deposits, structural deposits are deposits that are incorporated into financial derivatives by commercial banks, which are linked to fluctuations in interest rates, exchange rates, indexes, etc., or to the credit situation of an entity, allowing the depositor to obtain the corresponding gains on the basis of certain risks.

As interest rates for deposit products continue to decline, as a floating proceeds product, structural deposits have also been blunted by a number of sound investors since this year. The relative security of interest, higher median yield rates than the same period, relatively flexible product duration, etc., are important reasons for investors to choose structural deposit products.

It is interesting to note that, at present, the expected rate of return on institutional deposits is more inter-zonal and the final rate of return is determined on the basis of actual changes in the subject matter of linkage. For example, five structural deposits raised by a firm on 27 April and 8 May consisted of 10,000 yuan renminbi, with investment periods ranging from 36 to 366 days. The projected annualized rate of return is at a minimum of 1.43 per cent-1.95 per cent, up from 2.9 to 3.95 per cent.

So what is the overall performance of the current structural deposit rate? According to the Institute of Digital Science and Technology, 360, for example, in March, the average duration of structural deposits in the bank’s popular currency was 144 days, an increase of 5 days over the previous month; the average expected median yield rate was 2.75 per cent, a decrease of 3BP; and the average expected maximum yield rate was 3.4 per cent, a rise of 1BP over the previous month.

In terms of the rate of return on structural deposits with different linkage targets, the average expected median rate of return on linking exchange rates is 2.68 per cent, with an average projected yield rate of 3.13 per cent; the average anticipated median rate of return on the structural deposit on linking gold is 2.75 per cent, with an average expected maximum yield rate of 3 per cent; the average anticipated median rate of return on the structural deposit of the linking index is 2.98 per cent, with an average expected return rate of 4.21 per cent; and the median projected rate of return on linking shares, the Fund’s structural deposit is 2.8 per cent, with an average expected yield of 6.73 per cent.

Interest rate or further pressure

In the context of the downward trend in deposit rates, there has also been a small downward trend in the interest rate for structural deposits since this year, with a more pronounced trend in the middle-level rate of return near the actual rate of return.

According to the Institute of Digital Science and Technology, melting 360, as of January 2023, the median rate of return for structural deposits in the People’s Currency was expected to be 2.78 per cent on average, and the median rate of return fell for eight consecutive months. As of March, the median rate of return was 2,75 per cent on average, with a decline of 3BP on the ring.

According to different types of banks, the average yield of State-owned bank deposits was expected to be 3.17 per cent in March, a fall of 2BP in the ring comparison; an average rate of return for equity-based banks of 3.32 per cent and a fall of 5BP in the ring comparison; an average rate of return for business in cities of 3.25 per cent and a fall of 7BP in the ring comparison; an average rate of return for foreign banks of 5.82 per cent and a fall of 21BP in the ring comparison.

With the issuance in April of the updated SPS application (Revised 2023), the Market Interest Pricing Self-regulation Facility included “the marketization of deposit interest rates” in the examination. Under the pressure of the new mechanism, a new downward cycle of bank deposits is considered or will commence in the second quarter. As of now, many small-sized banks in the home have been reintroducing the interest rate of the People’s Currency deposit.

The securities report concluded that the cost of deposit controls were still back-to-back, and that “living-off” deposits were important captors. Subsequent self-regulation management of deposit pricing is expected to include, but is not limited to, the incorporation of innovative life-saving deposits such as agreement deposits, notification of deposits into self-regulatory mechanisms; the continued correction of deposits with deposit casings; and the continued regulation of “pseutic” structural deposits with too low prolific value, and the follow-up or consolidation of structural deposits (increase benefit + right value) into the self-regulatory mechanism ceiling to further depress the interest rate for structural deposits.

Reading rules on product earnings

However, as of now, products that are represented by structural deposits, large deposit sheets, etc., remain the dominant option for sound investors who favour deposit products.

“Structural deposits and major deposit sheets are depositaries, and insurance (with the exception of structural deposits issued by some foreign banks) are protected by the deposit-safety system, although there are various characteristics that are appropriate for investors in different needs.” Liu Silver, Analyst, Institute of Digital Science and Technology, melting 360. If investors have insufficient financial experience, they have less liquidity requirements and are more expensive to purchase long-term large bills; structural savings are more than six months, the actual rate of return for sound products is higher than the fixed-term deposit and major deposit rate for the same period, and structural deposits are suitable if investors have some financial experience, knowledgeable product yield rules and short-term financial needs.

In addition, the different structural deposit yield rates linked to different objects vary considerably. For investors, the purchase of structural deposits is subject to the rules of return to understand products, and a conservative and sound investor is suitable for a relatively stable exchange rate and a structural deposit of gold; a balanced and progressive investor may consider the purchase of a linkage index, stock, and the structural deposit of the fund, which may yield a higher rate of return but may also have a lower rate of return.

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