CITIC SEC: Maturing Time Deposits May Become Key Variable, Banking Fundamentals and Liquidity Poised for Dual Benefits

Stock News12-17 08:55

CITIC SEC released a research report stating that China's maturing 2-year+ time deposits in 2026 could reach RMB 45 trillion, with banks expected to benefit from both operational fundamentals and investment liquidity as funds migrate from fixed deposits. For banks: 1) Fundamentals will improve as reduced long-term deposit ratios lower liability costs; 2) Valuations may rise as absolute-return incremental capital enters the market, favoring stable-return sectors. The firm maintains optimism about banking stocks' stable-return asset attributes in the coming phase.

Key points: 1. Research Background: The 2026 maturity wall of bank time deposits may become a crucial variable affecting financial products and markets next year. 2. Deposit Dynamics: Closely tied to income expectations and yield comparisons. Historical patterns show: - Time deposit ratios negatively correlate with future income confidence indices (rising during low-confidence periods like 2013-2016 and 2021-present). - Deposit tenures correlate with yield spreads (3/5-year deposits surged when their spreads over Yu'ebao peaked in 2020/2023).

Projections indicate RMB 45 trillion in mid/long-term deposits will mature in 2026. Analysis of 15 listed banks' deposit maturity data reveals: 1) 2025/2026 maturities (RMB 35tn/45tn) significantly exceed historical RMB 20-30tn levels; 2) 2026 maturities may hit RMB 38tn for 3-year deposits originated in 2023; 3) Regional banks show higher long-term deposit ratios than national peers.

Market Implications: 1. Deposit Trends: Short-term products likely gain preference amid declining rates. 2. Financial Products: Dividend insurance and cash management products stand to benefit, with effects already visible in H2 2025. 3. Financial Markets: Equities and short-term bonds may gain most - equities from insurance inflows and risk-tolerant capital, short bonds from cash management demand, while money/long-bond markets face volatility from bank liquidity adjustments.

Banking Outlook: 1. Improved NIMs: Shorter tenures and non-bank deposits could lower funding costs, with 2026 NIM compression narrowing to 3-4bps. 2. Liquidity Challenges: Less stable non-bank deposits and shorter tenures may strain reserve management and negatively impact LCR/NSFR metrics.

Risk Factors: Unexpected deterioration in asset quality; adverse regulatory changes.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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