Average interest rates are higher, and banks are aggressively reclaiming the "demand deposit wealth management" market.

In 2022, the bank wealth management business experienced a rare setback, with an overall decline in scale. However, in 2023, this adjustment has seen a strong recovery momentum.

Although the overall business report of the wealth management market in 2023 has not yet been finalized, many banks have already announced their performance for 2023.

According to the latest data, banks' wealth management companies such as ABC Wealth Management, CCB Wealth Management, SPDB Wealth Management, ICBC Wealth Management, HZ Bank Wealth Management, and JS Bank Wealth Management have all released positive performance and results.

Of particular note is the significant recovery of bank wealth management products in the most active "current wealth management" market. They have received market feedback with higher returns and more stable performance, as well as significant growth in scale.

Multiple Wealth Management Subsidiaries Announce Positive Results in Advance

In 2023, due to the impact of redemption waves, the bank wealth management business did not start smoothly at the beginning of the year. However, with the restart of the bull market in the bond market in April of that year, the scale of bank wealth management turned around.

Based on the currently published business data of various bank wealth management subsidiaries, in 2023, the issuance of products by bank wealth management subsidiaries has increased, and the management scale has remained stable.

For example, ICBC Wealth Management issued over 700 products throughout the year, with sales of wealth management products exceeding 800 billion yuan. By the end of 2023, the company's management scale exceeded 400 billion yuan, a slight increase from the end of the previous year.

CCB Wealth Management raised over 1 trillion yuan in scale throughout the year, with a management scale exceeding 520 billion yuan by the end of 2023.

SPDB Wealth Management issued 1,169 new products in 2023, and the company's management scale has exceeded 1 trillion yuan (including entrusted management) by the end of 2023.

HZ Bank Wealth Management issued 943 new products throughout the year, with a total fundraising scale exceeding 700 billion yuan.

In addition, ABC Wealth Management's product scale has also exceeded 1.8 trillion yuan at its peak...

Cash Management Products Gain Popularity

In 2023, cash management products from banks have received a lot of praise and have become the focus of stable development for several wealth management subsidiaries.

Data shows that by the end of 2023, the outstanding scale of cash management products from HZ Bank Wealth Management reached 113 billion yuan. If we refer to the bank's semi-annual report data, cash management products from HZ Bank Wealth Management account for a considerable proportion. (By the end of the first half of 2023, the outstanding scale of HZ Bank Wealth Management's products reached 335.479 billion yuan).

This trend is reflected in several bank wealth management companies. Especially, with more major banks launching "fast redemption" services, cash management wealth management products that are compatible with these services have become the "focus area" for many wealth management institutions.

"Strong" Performance Beyond Industry Expectations in the Interbank Wealth Management Sector

The interbank wealth management products in the banking sector have shown strong performance, surpassing the expectations of both the industry and external researchers.

Previously, it was widely expected that the implementation of the new regulations on cash management wealth management products, known as the "new regulations," in 2023 would affect the attractiveness of interbank products. The performance and expansion of wealth management companies would be impacted.

However, the reality is different.

A report by Liu Yu, Chief Fixed Income Analyst at GF Securities, shows that the new regulations have not significantly affected the expansion of interbank products in terms of scale. In 2023, the interbank products achieved a scale increase of nearly CNY 300 billion. As the current outstanding scale of wealth management has not yet recovered to the pre-negative feedback level, the absolute scale of interbank products is lower than the same period in 2022. However, in terms of proportion, the scale of interbank products has increased instead of decreased. By the end of 2023, the outstanding scale of interbank products reached CNY 8.5 trillion, accounting for 33%, higher than the 31% of the same period last year.

"Advantages" in Market Competition

The continued attractiveness of interbank products may be related to the operating style, resource endowment, and brand effect of banks themselves.

Liu Yu of GF Securities believes that the advantages of interbank products include the following:

1. Interbank products meet the current market demand for stability from retail investors.
2. Compared to other competing products such as money market funds, interbank wealth management products can leverage outsourcing advantages to enhance the investment experience for users.

According to Liu Yu's report, in terms of performance, the annualized yield of interbank wealth management products remained stable at around 2.3% in 2023. Although the yield of money market funds has rebounded to some extent during the same period, the yield level has not exceeded 2%, resulting in an average difference of nearly 39 basis points compared to interbank wealth management products.

Liu Yu also believes that looking ahead to 2024, with the background of deposit rate cuts in banks, the opportunity cost of retail investors for investment and wealth management will decrease. This may bring new growth opportunities for wealth management products as a substitute for deposits. In the future, deposit-oriented wealth management products represented by interbank products will continue to be the main focus of wealth management strategies. However, as the wealth management industry becomes more "liquid," with an increased allocation to ultra-short-term bonds, cash, and deposits, the influence of wealth management on the bond market, especially the credit bond sector, may weaken.

Liu Yu, Chief Fixed Income Analyst at GF Securities

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