Yields on Bank Wealth Management Products Decline for Seventh Consecutive Month in September

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The yields on wealth management products (WMP’s) sold by Chinese banks have seen their seventh consecutive month of decline, following the launch of asset management regulations in April which removed the “implicit guarantees” they were previously perceived to enjoy.

The “2018 September Bank Wealth Management Market Analytical Report” (2018年9月银行理财市场分析报告) released by Rong360 indicates that the average expected yield for bank WMP’s was 4.58% last month, for a 0.09 percentage point decline compared to August and the lowest level tapped in a year.

September also marked the seventh consecutive month that WMP’s in China saw a decline.

The report from Rong360 further forecasts that the the required reserve ratio cut launched by the Chinese central bank in October will unleash more liquidity, driving yields on bank WMP’s lower as funds remain “rationally ample.”

In addition to this it takes a considerable period of time to bring out new bank WMP’s, while old products are coming under pressure, which will serve to further reduce the issuance volume in October.

According to survey data a total of 10,452 bank WMP products were issued in September, for a decline of 1,455 compared to August, or an on-month drop of 12.22%.

The September issuance volume also marked a decline of 2,235 products compared to the same period last year, or a YoY decline of 17.62%.

Principal-protected WMP’s – whose issuance is set to be phased out following the launch of new asset management regulations, accounted for 25.35% of all bank WMP’s issued in September, for a decline of 0.97 percentage points compared to August, and the seventh consecutive month their share of the total has shrunk.

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