Open source securities: the strong performance of deposit and loan business drives the expansion advantage of large banks, and the strength of bond issuance may continue.

The Open Source Securities report states that, from the analysis of the situation of opening red envelopes for deposits and loans, large banks have more advantages in expanding their balance sheets and ensuring performance, and it is recommended to focus on the allocation value of state-owned large banks and wealth-based shareholding banks. On the pricing of NCDs, the bank believes that large banks currently have no pressure on pricing gaps, and under the protective stance of the central bank, there is currently no need to raise prices. The funding situation is expected to be stable going into the new year, but due to the long Chinese New Year holiday this year, cash outflows and the intensity of deposit inflows after the Spring Festival may be affected to some extent, so it is advisable to pay attention. The main points of the Open Source Securities report are as follows: By 2025, the optimization of the credit structure, the narrowing of the price reduction for new issuances, and a moderate volume and stable prices are expected in 2026. In 2025, the total volume of credit maintained reasonable growth, with further optimization of the structure. After the impact of the normalization of debt issuance in RMB loans throughout the year, the growth is expected to be around 7%, with technology, green, and inclusive loans growing by 11.5%, 20.2%, and 10.9% respectively, continuing to outpace the average loan growth rate. In terms of pricing, the proportion of low-priced loans in the range of (0, LPR-1%) continued to decrease in December. The central bank's description of the cost of social financing has gradually shifted from "promoting decline" to "promoting downward movement at a low level" and "promoting operation at a low level", reflecting that new loans may have entered a "stable price" stage. In 2026, the total volume of credit in the opening red envelopes remains moderate, with a smooth pace, with constraints coming from the debt-to-loan ratio and cost bottom line. The pace of credit in 2026 may remain steady, but the January injection may be relatively moderate, with the estimated incremental RMB loans around 5 trillion, slightly less than the previous year. Expectations for a reduction in LPR interest rates have weakened, with banks not rushing to increase lending, possibly delaying some projects until February for disbursement; emphasis on the debt-to-loan ratio and cost-point accounting at the assessment level, making it difficult to see low-priced loans below 2%, and visible reduction in refinancing behavior among national central enterprises. According to cost-point accounting, if the average cost of debt is taken as 1.6% as the cost of funds, without considering operating expenses, enterprises generally need a loan yield of 2.3% or higher to cover the cost of assessments. Against the background of an increase in the gap between deposit and loan growth rates and a certain price-to-value ratio recovery for bonds, the bank believes that the pace of credit in 2026 will continue to trend towards a stable slowdown, with bills, forfaiting and other low-priced varieties continuing to be pressured to decrease. Reasonably assessing the impact of deposit withdrawals on liquidity, asset management products are flowing back to the banking system through interbank channels. In the third section of this report, the central bank particularly discussed the perspective of liquidity from the "merger of asset management products and bank deposits". In fact, "deposit relocation" has never been about reducing the total amount, but rather about structural transformation, with a large part of enterprise and household deposits being allocated to asset management products, a significant portion of which are directly invested in interbank deposits and NCDs, and other underlying assets will eventually be transformed into bank deposits to realize inflows. disclosed by the central bank show a year-on-year increase of about 8.1% in 2025, maintaining a steady growth trend in recent years. In this regard, the bank believes that tools such as reserve ratio cuts for overall liquidity injection may be maintained in moderation. The opening red envelopes for deposits are better, and the significant effects of "anti-internal competition" in pricing are evident, with a focus on the possibility of strengthening self-discipline in interbank deposits. In 2025, the bank's deposit cost ratio saw a significant decrease, with the possibility of a window for interest rate cuts in 2026 depending on the improvement in bank liability costs. The deposit cost ratio for listed banks decreased from 1.80% to 1.54% in 2025. In 2026, banks' deposits may benefit from factors such as credit derivatives, high retention rates, and the return of wealth management products, with a satisfactory overall growth, and the pricing of small and medium-sized banks may currently only be 30-40BP higher than that of state-owned banks, and interbank bidding behavior has decreased among institutions. However, some banks with strong scale demands may raise their interbank financing quotes, and in 2025, there was a significant increase in the allocation of interbank deposits through wealth management products, suggesting the need to pay attention to the possibility of strengthening self-discipline in interbank deposits in the next phase (such as setting OMO deviation for active deposits, setting upper limits for fixed deposits, etc.). Risk warning: Unexpected narrowing of net interest margin; poor business conditions for some enterprises affecting credit costs, etc.