GuShiio.com ① Currently, due to factors such as the reduction in deposit interest rates, the cost of bank funds has dropped. Some banks cut prices and promote sales in order to expand market share.
② The possibility of bank quarter-end impulse is not ruled out. Bank of Jiangsu, Nanhai Rural Commercial Bank, Ping An Bank, and Industrial Bank have all locked the interest rate preferential time for this round of consumer loan products to the end of March.
③ The industry recommends that banks further segment their customer base and develop innovative consumer credit products and services differently.
Cailian News Agency, March 8 (Reporter Guo Zishuo)Another commercial bank’s consumer loan interest rate dropped to freezing point. On March 7, Bank of Jiangsu’s Weixin Official Accounts announced that based on simple interest, the annualized interest rate for new consumer loans will start at a limited time of 2.58% and will expire on March 31. The maximum period is 1 million and the maximum period is 3 years.
A loan intermediary lamented to the reporter of the Financial Union: “According to the current market, if Jiangsu Bank can really release an annualized interest rate of 2.58%, then they are indeed the lowest annualized interest rate at present.”
Bank of Jiangsu is the first city commercial bank to open consumer loan interest rates as low as 2.58% freezing point. Prior to this, some netizens posted pictures that invited customers of China Merchants Bank could use coupons to achieve an annualized interest rate (simple interest) of 2.58%.
The adjustment of consumer loan interest rates is not low. Currently, banks including Nanhai Rural Commercial Bank, Dongguan Rural Commercial Bank, Ping An Bank, Industrial Bank, etc. have all refreshed the minimum annualized interest rate level of consumer loans.
From an industry perspective, although a few banks ‘consumer loan interest rates have exceeded 2.6%, the interest rates of most new consumer loans are still above 2.6%. In comparison, according to monitoring by Rong360 Digital Technology Research Institute, in December 2024, the average minimum enforceable interest rate for online consumer loans of national banks was 3.08%, a month-on-month decrease of 1BP and a year-on-year decrease of 28BP.
Some experts warned that although the cost of capital has declined and the problem of superimposed asset shortages has not been solved, some banks hope to gain competitive advantages in consumer loan business by lowering interest rates, commercial banks should still pay attention to maintaining loan interest rates at a reasonable level to ensure business sustainability.
The new consumer loan interest rate is mainly above 2.6%
Although the bank’s consumer loan interest rate continued to decline, the market did not reproduce the consumer loan products with an interest rate beginning with “1” from the previous year. The annualized interest rates of newly issued consumer loan products are mostly above 2.6%. Compared with large state-owned banks, the optimal interest rates for consumer loan products of joint-stock banks and urban and rural commercial banks are lower. Some people from major state-owned banks said that the current consumer loan level of major state-owned banks is still mainly around 3%.
In terms of time, banks including Bank of Jiangsu, Nanhai Rural Commercial Bank, Ping An Bank, and Industrial Bank have locked the interest rate preferential time for this round of consumer loan products to the end of March.
In terms of urban rural commercial banks, on March 7, Nanhai Rural Commercial Bank announced that the annualized interest rate for its consumer loan product Youcai Loan for time-limited bonds was as low as 2.6%(simple interest). Dongguan Rural Commercial Bank’s minimum annualized interest rate for consumer e-lending has been reduced to 2.75%(simple interest). The loan limits of the above two consumer loan products are both 1 million yuan.
In addition, Bank of Hangzhou currently has a minimum annualized interest rate of 2.7%(simple interest) after borrowing user coupons for the first time, with a maximum amount of 200,000 yuan. At the same time, new customers also have interest-free coupons, which are “divided into 6 installments, 3 installments are used first, and then 3 installments are interest-free.”
In terms of stock banks, Ping An Bank and Industrial Bank have limited interest rates before March 31. Among them, the minimum annual interest rate (simple interest) of Ping An Bank’s white-collar Xinyi loan is 2.7%, with a limit of 1 million yuan; the minimum preferential annualized interest rate of Industrial Bank’s consumer loan product “Xingshan Loan” is 2.78%.
Dong Ximiao, chief researcher of the China Recruitment Alliance, said in an interview with a reporter from the Financial Union that due to factors such as the reduction in deposit interest rates, the cost of bank funds has dropped, and there is a certain basis for reducing the interest rate on personal consumption loans. At the same time, in order to expand market share, some banks hope to attract more customers through lower interest rates, which is a kind of “small profits but quick turnover” promotion behavior.
Su Xiaorui, a senior researcher at Suxi Zhiyan, also said in an interview with a reporter from the Financial Union that although various banks are lowering consumer loan rates, their strategies are different. Some banks restrict self-operated channels to apply for discounts, which means removing traffic platform agency fees and converting external customer acquisition costs into new customer subsidies to control consumer loan prices. At the same time, the competitiveness of self-operated apps and self-operated Mini programs has also improved.
Expert: It is not universal, and the risks are generally controllable
Will the competition of “small profits but quick turnover” affect the normal operations of banks? From an object-oriented perspective, banks have their own screening criteria. For example, Ping An Bank has released this round of interest rate coupons to two types of users: one is “high-quality customers who have successfully granted credit to white-collar workers with a specific plan for the first time”, and the other is “existing credit customers who meet the specific plan”. The system will regularly automatically issue corresponding preferential interest rate pricing coupons to customer accounts.
Industrial Bank’s consumer loan product “Xingshan Loan” interest rate coupons are issued directly to invited customers. In addition, Industrial Bank releases a certain number of flash loan interest rate coupons, which can be received in limited quantities by qualified new customers and customers with a pre-emptive interest rate of no more than 6%.
The above-mentioned major state-owned bank person said that judging from the qualifications of customers, people like civil servants, teachers, enterprises and institutions can generally get the best interest rate. However, the specific scale still needs to be considered based on the actual situation of each bank, such as the scope of the white list and the limited customer base of new customers.
Su Xiaorui believes that the possibility of banks ‘quarter-end impulse cannot be ruled out. Combined with the white-listed customer base and the limited customer base for new customers, this arrangement has a high probability that it will not affect the bank’s sustainable operations. However, some banks ‘new customer promotions have dropped to the interest-free level. This phenomenon also shows that the current consumer loan interest rate is still fierce.
In Dong Ximiao’s view, lowering consumer loan interest rates will help reduce financial consumer interest expenses and increase consumers ‘willingness to apply for consumer loans, thereby helping boost consumption and expand domestic demand. However, some banks launch ultra-low interest rate consumer loans, which are usually targeted at high-quality customer groups and have higher requirements on customers ‘occupations, income, etc., so they are not universal and the risks are generally controllable.
Be wary of convoluted competition
High-quality assets are scarce, and banks “roll” interest rates lock in high-quality customers and asset returns. However, the fierce competition for consumer loan prices is undoubtedly “worse” for the net interest margin of commercial banks. In the fourth quarter of 2024, the net interest margin of commercial banks fell by 0.01 percentage points month-on-month to 1.52%.
Dong Ximiao reminded that the Central Economic Work Conference proposed to comprehensively rectify “convoluted” competition. Banks should abandon the complex of scale and speed, and not pursue simple scale growth and market share. Instead, they should keep loan interest rates at a reasonable level to enhance business sustainability.
“For financial institutions, it is recommended to further segment the customer base and develop innovative consumer credit products and services differently.” Dong Ximiao suggested that in addition to traditional high-quality customers such as civil servants and white-collar workers, commercial banks and consumer finance companies could focus on new citizens such as employees of new-quality productivity enterprises, college graduates and residents of third-and fourth-tier cities. In terms of marketing channels, banks can target young people’s Internet thinking styles and habits, embed high-frequency online scenarios, such as social, Short Video, and life service apps, and promote consumer credit products in a timely manner. At the same time, differential pricing will be carried out based on customer groups ‘risks and needs, and fees will be appropriately reduced and profits will be transferred to emerging customers.
