According to a research report from Guotai Haitong Securities, on May 11, 2026, the central bank released its monetary policy implementation report for the first quarter of 2026, indicating that new loan issuance rates are gradually stabilizing. The next phase will continue to implement a moderately accommodative monetary policy, leveraging the integrated effects of incremental and existing policies. For 2026, investment in the banking sector should focus on three main themes: 1) Identifying targets with potential for improved or sustained high earnings growth; 2) Valuing banks with expectations for convertible bond conversions; 3) The dividend strategy is still expected to persist. The main views of Guotai Haitong are as follows:
New loan issuance rates are gradually stabilizing, while bill financing rates have increased. The weighted average interest rate for newly issued loans in March was 3.23%, up 9 basis points from December. Among these, the rates for general loans, corporate loans, bill financing, and mortgage loans were 3.54%, 3.05%, 1.46%, and 3.06%, respectively, changing by -1bp, -6bp, +32bp, and remaining flat compared to December. The rise in bill financing rates contributed to a marginal increase in the overall new loan issuance rate, while the decline in general loan rates converged.
In terms of loan structure, the financing structure continues to optimize. By the end of Q1 2026, loans for technology, green initiatives, inclusive finance, elderly care industries, and the digital economy grew by 13.7%, 17.6%, 10.5%, 26.3%, and 22.4% year-on-year, respectively, all exceeding the growth rate of total loans.
New deposit rates have fallen to relatively low levels. In March, the weighted average rates for newly issued demand deposits and time deposits were 0.08% and 1.31%, respectively. After multiple rounds of deposit rate cuts, new deposit rates have reached relatively low levels. As existing time deposits gradually mature and are repriced, this is beneficial for improving banks' liability-side costs.
In its monetary policy report, the central bank systematically reviewed how major global economies' loan pricing benchmarks have evolved from single to multiple benchmarks. For example, the U.S. transitioned from the Prime Rate to LIBOR and then to SOFR; the UK moved from LIBOR to SONIA, operating in parallel with the Bank Rate; Germany, Japan, and others have multiple benchmarks coexisting, while emerging economies like India also employ diverse benchmarks such as the central bank's repo rate and 3-month/6-month government bond yields. International experience shows that different loan scenarios are suited to different benchmarks, and floating-rate and fixed-rate loans may correspond to different anchors. In major economies, loan pricing benchmarks have generally evolved from a single benchmark to a diversified benchmark interest rate system to reflect changes in funding costs and credit risk, adapting to different borrowers, loan types, and financing scenarios.
Combined with the proposal in the "Key Directions for the Next Phase of Monetary Policy" to "reform and improve the LPR, focusing on enhancing the quality of LPR quotations to more accurately reflect loan market interest rate levels," and the central bank's ongoing emphasis on strengthening policy rate guidance, improving market-based interest rate formation and transmission mechanisms, and enhancing the implementation and supervision of interest rate policies, this may lay the theoretical groundwork for subsequent optimization of loan pricing benchmarks.
For banks, this means the importance of loan risk pricing capabilities continues to rise. The previous model relying on low-price competition may become less sustainable. In the future, banks with stronger pricing power and liability cost management capabilities will have a competitive advantage.
The next phase requires accelerating the construction of a comprehensive macroprudential management system. The central bank stated that the interconnectedness of China's economy and finance, the complexity of the financial system, and the spillover effects and linkages between domestic and international financial markets are increasingly strengthening. It is necessary to accurately grasp the profound implications of "comprehensive coverage," further strengthen macroprudential management, and enhance the resilience of the financial system. To build a comprehensive macroprudential management system in the next phase, the following key tasks need to be advanced: First, strengthen the coordination of the "dual-pillar" regulatory framework; second, improve the macroprudential management mechanism; third, solidify the macroprudential monitoring and assessment mechanism; fourth, enrich the macroprudential policy toolkit and continue effective macroprudential management in key areas.
Risk warnings: Credit demand weaker than expected; structural risks exceeding expectations.
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