Yields on Bank Wealth Management Products Drop to 18 Month Low

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Yields for bank wealth management products in China have dropped to their lowest levels in a year and a half, following the launch of new asset management regulations in April that remove implicit guarantees for them.

2049 bank wealth management products (WMP’s) were issued during the week from 9 – 15 November, for an increase of 179 compared to the weak previously according to data from Rong360.

The average expected yield for these WMP’s was 4.36%, for a decline of 0.07 percentage points compared to the preceding week.

The week of 9 – 15 November saw the issuance of 433 three month WMP’s with average expected yields of 4.21%; 841 three to six month products with average expected yields of 4.34%; 692 six to 12 month products with average expected yields of 4.45%, and 74 WMP’s with maturities of over 12 months, and average expected yields of 4.69%.

The average expected yields of WMP’s sold by municipal commercial banks was the highest at 4.57%, while for rural credit societies the average was 4.40%, for joint-stock banks it was 4.31%, for state-owned banks the figure was 4.30%, and for postal banks and rural commercial banks the readings were 4.18% and 4.10% respectively.

For foreign-invested banks the average WMP yield was 3.23%.

Only two banks provided yields of over 5% for WMP’s – Huaxing Bank and the Bank of Langfang.

23.52% of bank WMP’s issued that week were principal guaranteed, for a decline of 1.88% compared to the preceding period.

While SHIBOR had risen following PBOC’s nine trading day absence from open market operations as of 16 November,┬áRong360 analyst Liu Yin said that bank WMP yields were not that sensitive in their responsiveness to market rates.

Since the start of November bank WMP’s have continued to trend lower despite the absence of pressure from regulatory assessments of banks and ample liquidity on the market.

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