Wealth Management Products Post First Yield Decline in a Year

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The average expected yields for wealth management products (WMP) sold by banks in China posted their first on-month decline in 12 months in March.

Data from Rong360 indicates that the average expected yield for bank WMP’s was 4.88% in March, for a decline of 0.03 percentage points compared to February.

Expected yields were primarily concentrated within the range of 4 – 6%, with WMP’s providing yields of 4 – 5% accounting for 44% of products, and those providing yields of 5 – 6% accounting for 47%.

When analysed on the basis of maturities, 6 to 12-month WMP’s saw their average expected yields decline 0.02% on-month, with all remaining tenures posting modest upticks.

Guaranteed return products (保证收益类产品) provided an average expected yield of 4.35% in March, holding steady with February, while guaranteed principal floating return products (保本浮动收益类产品) provided an average expected yield of 4.37%, for an on-month decline of 0.02 percentage points.

Non-guaranteed principal floating return products provided an average expected yield of 5.15%, for an on-month decline of 0.02 percentage points.

The average expected yield for commercial bank WMP’s was 4.98%, for an on-month decline of 0.01%, and the highest yield out of all bank categories.

Joint-stock commercial banks, foreign-invested banks, and state-owned commercial banks provided expected yields of 4.96%, 4.96% and 4.89% respectively.

Rong360 analyst Liu Yinping (刘银平) said that the main reason for the first decline in average WMP yields in 12 months was primarily easing liquidity in March, triggering a short-term decline in interest rates.

Liu said that funds remained loose April, but that tax payments would have a significant impact upon liquidity starting form the middle of the month.

In the second quarter the pace of local government bond sales is also set to increase, further accelerating growth in government deposits.

For this reason Liu expects bank WMP yields to remain contained in the first half of the month before lifting subsequently, yet with limited room for fluctuation.

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