Jingu Finance | Banking stocks rose collectively, with Cqrc Bank (03618) up 3.63%, Bank of Chongqing (01963) up 2.8%, Agricultural Bank of China (01288) up 2.65%, Postal Savings Bank of China (01658) up 2.19%, Bank of Communications (03328) up 2.12%, Industrial and Commercial Bank of China (01398) up 2.1%, China Citic Bank Corporation (00998) up 1.98%.
GF Securities said that in the short term, the LPR reduction will reduce bank interest margins. If the central bank hedges or the fiscal stimulus can widen the bond term spread, the pressure on interest margins may be slightly reduced. However, overall, interest rate cuts have a negative impact on the short-term nominal performance of banks. Currently, mortgage loans account for about 10% of the total assets of commercial banks. Static calculations show that for every 10 BP interest rate cut, it will affect the bank's interest margin by 1 BP, and banks with a higher mortgage ratio will be more affected. In the medium and long term, macroeconomic interest rate cuts are used to alleviate the downward pressure on the economy with bank interest rate spreads. If the core contradiction of bank valuation is asset quality and medium to long-term economic growth, interest rate cuts can be bullish for bank valuations. The current core contradiction of banks is the asset quality pressure generated by the economic downturn, so interest rate cuts are not bad news for the medium-term fundamentals of banks.
