Last week, the central bank and the State Department announced that the reserve rate cut, cut, the savings interest exemption from income tax
United Securities
People's Bank of China recently announced that from October 15, 2008 down from RMB deposit-taking financial institutions to deposit reserve ratio by 0.5 percentage points; from October 9, 2008 down from a one-year yuan loans to keep the benchmark interest rate 0.27 percentage points each, Other deadlines grade benchmark deposit and loan interest rates adjusted accordingly. The State Council also recently decided on October 9 this year from savings on interest income waiver to levy personal income tax. In that case, implementation of these policies on the insurance industry be?
The monetary policy adjustment in September and the central bank lowered the benchmark interest rate of RMB loans and small and medium-sized financial institutions, the RMB deposit reserve ratio, the same monetary policy easing, but the insurance industry as well as the impact of the current situation there have been subtle changes in both.
The cost of capital to ease the pressure a little
September monetary policy adjustment, one-year benchmark deposit rate to maintain a high of 4.14 percent unchanged for the life insurance policies in respect of dividends and the cost of capital risk everything down to a certain resistance; the one-year benchmark deposit interest rates despite falling To 3.87 percent, but the interest can be exempt from income tax, compared to the previous 3.93 percent after-tax real interest rates, one-year benchmark deposit rate actually dropped only 0.06 percentage points better than nothing, the risk of dividends and universal risk of a slight slowdown in capital cost pressures . At the same time, the central bank to continue in the future, taking into account the expected rate cut, whole, the life insurance business for the favorable terms of the cost of capital.
Bond yields decline
Lower interest rates and future rate cut is expected to further reduce the bond yield, and the deposit reserve rate cut released more liquidity will be further pushed up bond prices and thus reduce the rate of return. Unless insurance companies are willing to take the initiative to reduce operations, policies or its cost of capital remains a relatively attractive deposits to maintain a certain rate, this is bound to require insurance companies to obtain higher than deposit interest rate of return on their investment.
However, from the beginning of September, 5, 10 bond yields have been lower than the October 9 from the introduction of the one-year deposit interest rate for new insurance companies have lost their attractiveness in terms of assets, unless to do short-term Transaction, or might as well put in the time, there are, after all, the new duty-free treatment.
Despite the current 5-year, the 10-year corporate debt is still higher than the after-tax yield on October 9 started to implement the one-year deposit rate, but its declining trend can be expected, insurance companies, the future of access to new assets Yield will be lower. Although we from a different point of view, all the way down bond yields, the price of its counterparts all the way up to the transaction for the purpose of holding the bonds can be more optimistic about the income gap, but the insurance companies take into account the duration of assets and liabilities matching principle More bond allocation is still due to hold their eyes, the whole of the insurance bond yields bad terms.
Equity yields are not simply turn for the better
Although the central bank to relax monetary policy is expected to be confirmed and further enhance, but from the world's collective central bank to cut interest rates and stock indexes fall countries do not change the phenomenon can be seen, investors in the macro-economic pessimism has yet to reverse the stock market in the short term remains difficult There are looking forward to.
Loan-to-time as domestic financial institutions, like the transmission mechanism (a number of domestic banks and insurance companies, while not directly involved in loan-to-time transactions, but to participate in meetings held by foreign financial institutions in the loan-to-equity and indirect losses suffered), the adjustment of monetary policy Domestic banks, will be in the same way through the transfer to insurance companies.
The monetary policy adjustment to the major banks in two ways: 1. Lower the interest rate differential. Due to the structure of bank deposits in a larger proportion of demand deposits interest rates unchanged, declining interest rates, the central vote at the same time, national debt, Jin Rongzhai such as the yield is expected to continue to fall, leading to a narrowing interest rate differential space. 2. Non-performing rate may decline after the extension of some of the bad. Funds may Enterprises chain tension through this difficult period, or more on hold for some time. For banks, these bad, the more positive aspects are intertwined, it is difficult to determine exactly, but we believe that the current Ruoshi, investors in the bank's prospects might read some of the more negative side, after all, the current government is expected to launch the More is to help policy-oriented enterprises, and enterprises and among banks to a certain extent, the zero-sum relationship.
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