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have you all noticed a phenomenon recently when you go to the bank to deposit money the staff rarely recommend Financial products to you anymore in the past when you deposited money at the bank the staff would introduce you to many Financial products but now why have they stopped recommending them it's because most Financial products have been taken off the shelves actually these Financial products are all made by the bank's owned subsidiaries and their safety ratings are quite High in the past Banks relied on these products to attract deposits and make profits but why have they suddenly been taken off the shelves the reason is simple they used to make money before but now they're not making money and some are even losing money if a product is losing money why sell it this is closely related to the real estate market because most Financial products essentially rely on real estate once the real estate market loses its profitability all these castles built in the air will collapse with Society unable to find ways to make money facing an asset shortage Banks can only continue to lose money moreover it's foreseeable that interest rates will continue to decrease the high interest products offered by Banks before are declining and it's difficult for banks current profitability to support investors Financial returns so the banks have laid their cards on the table saying I'm not doing it anymore I'm not playing anymore I'm going flat interesting isn't it China's econom economy is deteriorating the real estate crisis is severe and the banking industry is deeply affected recently many banks have suddenly terminated a large number of financial products ahead of schedule attracting widespread attention from the public ing to incomplete statistics as of June more than 20 Financial products have already been terminated prematurely in the coming weeks several more products will be terminated early a phenomenon affecting major Financial corporations China Post Global announced on June 11th that its postal savings wealth wisdom hun customization number six R&B Financial product is scheduled to be terminated early on June 17th 2024 whereas its original maturity date was June 17th 2029 prior to China Post Global Ming Shang Bank announced on June 4th the premature termination of its yuju fixed income class 2-year closed 150th Financial product effective June 11th China construction Bank also announced the premature termination of its CCB wealth management stable Bay Area value investment one-year regular open second Financial product on June 21st and another Financial product to be terminated on July 12th among the prematurely withdrawn Financial products some had been established for only over a month haasa wealth management announced in June the premature termination of two Financial products both established in April this year just this past May both products also announced rate discounts adjusting the annual fixed management fee to 0.15% since the beginning of this year almost every trading day has seen announcements of several products being terminated prematurely ing to data from puyi standard as of June 13th there have been a total of 1,053 net value type Financial products terminated prematurely this year compared to 878 during the same period last year an increase of 175 or almost 20% other data shows that in 2023 three more than 2,000 Financial products were terminated prematurely most of which were fixed income products a financial manager at a Commercial Bank Jang ping explained that the so-called premature termination of financial products refers to the phenomenon where some fixed term Financial products terminate their contracts before the agreed term expires or some indefinite term Financial products no longer continue to perform their contracts and are liquidated prematurely ing to Mainland media reports the premature termin of financial products by Banks has sparked consumer dissatisfaction Miss Wong said that sometimes if you don't notice the text messages the funds that are terminated early may not yield any profits after discovering this one has to rearrange the funds which is very Troublesome a financial planner in g n Lea stated that the premature termination of financial products significantly impacts investors on one hand it may mean investors cannot obtain expected returns and could reduce losses from underperforming Financial products on the other hand if investors haven't arranged alternative Financial plans the refunded funds may lay idle in their accounts generating no profit ing to Lina an increasing number of premature terminations could affect consumer confidence in financial products bank's financial management companies need to continually enhance their investment research capabilities cultivate investment research talents and improve risk management levels they should enhance their understanding of macroeconomic situations and financial markets adjust and optimize asset allocations and investment strategies promptly based on market and client changes and optimize product structures for investors before purchasing Financial products they should consider their financial status risk tolerance expected income liquidity needs and understand the contract to invest rationally the rer Shing Hong Financial Research Institute stated that aside from structural and Target profit products premature terminations of most Financial products leave investors with a negative experience disrupting their investment plans and requiring them to spend additional time selecting products it also reflects operational and investment research capability issues among managers leading to unsustainable product operations these Financial products are all issued by state-owned subsidiaries with banks originally relying on these products to attract funds why terminate them prematurely ing to a banking professional named Shia dong the fundamental reason banks are quitting is due to declining interest rates shaoang explained Bank financial management generally invests in fixed deposits large certificates of deposit bonds Etc during a period of declining interest rates the yields of these products also decrease currently high yield products like large certificates of deposit are being taken off the shelves in this situation the originally expected high returns cannot be achieved so it's more responsible to terminate the products early and withdraw which is better for customers a banking Insider told Chinese media that over the past 2 years macroeconomic conditions and Market fluctuation have caused many Financial products performances to deviate from expected returns unexpected events exceeding Market expectations could also affect the holding returns of financial products prompting early terminations in this context products that shrink in scale and sustain miniaturized shares could also be terminated early by financial institutions analysis also points out that China's economic slowdown and the real estate Market's downturn have severely impacted China's Financial system posing significant challenges to the banking industry therefore the premature termination of financial products has emerged as a precaution against Financial risks additionally a banking professional candidly stated that frequent premature terminations began occurring after the fourth quarter of 2022 moreover Reuters reported on June 20th cited three informed sources that recently China's national Financial supervisory Authority has issued a latest directive to small Regional banks in provin bu es like Shandong guangong and Jang requiring them to reduce financial management business by the end of this year and completely stop selling Financial products by the end of 2026 unless these banks have independent financial management subsidiaries this new directive represents the latest measure by the Chinese communist government to control risks in the vast banking wealth management industry over the past few years this industry has been a target of regulatory crackdowns aimed at combating Shadow banking activities the latest directive also mandates small Regional Banks to standardize wealth management operations and invest funds in capital markets in a compliant manner additionally it requires Banks to clearly separate wealth management operations from other business activities to eliminate any implicit guarantees should these investment products perform poorly and require Bank intervention however specifics of this new directive have not been publicly disclosed the China Banking and insurance Regulatory Commission cbirc introduced the commercial Bank wealth management business supervision and management measures and the Commercial Bank wealth management subsidiary management measures in 2018 requiring Banks to establish subsidiaries dedicated to wealth management operations however no specific timetable was set for banks to comply since the introduction of these regulations in 2018 major state-owned Banks and large National Commercial banks in China have established independent wealth management subsidiaries however most small local banks have yet to follow suit the expectation of continued low interest rates has been widespread and recent actions by some small and mediumsized Chinese Banks to continuously lower deposit rates seem to confirm this trend for instance on June 4th Lano Royal Commercial Bank reduced its three-year fixed deposit rate from 2.7% to 2.6% just the day before Gansu bank had already lowered its three-year fixed deposit rate from 3% to 2.6% marking a significant 40 basis point decrease the largest reduction in this round of rate cut furthermore on June 1st changhai rural Commercial Bank in guangong pingla rural Cooperative Bank in Guang XI and futran R Commercial Bank also lowered their three-year fixed deposit rates to 2.2 2.8 and 2.8% respectively after multiple interest rate Cuts over the past 2 years fixed deposit rates above 3% have become scarce the trend of interest rate Cuts is far from over in the first quarter of this year the net interest margin for commercial Banks was 1.54% down 15 basis points from 1.69% in the fourth quarter of 2023 hitting another historic low net profit growth rates also dropped from 3.2% in 2023 to 0.7% a decrease of 2.5 percentage points among them state-owned and private banks are the most significant declines in net interest margins with ICBC agricultural Bank of China Bank of China and Bank of communications all having net interest margins below the industry average therefore to maintain profits commercial Banks must continue lowering deposit rates additionally on June 14th The People's Bank of China released financial data for May showing that the broad money supply M2 was 301 trillion yen at the end of May a year-year increase of 7% marking the lowest growth rate on record narrow money and one balance was 64 trillion yen a year-on-year decrease of 4.2% marking the second consecutive month of negative growth a first in recorded history analysis indicates that these Grim statistics reflect weak willingness among Enterprises and individuals to borrow with businesses lacking expansion drive and economic Vitality remaining subdued to stimulate economic growth further reductions in loan interest rates are necessary the current phenomenon is that even with deposit rates near zero people still prefer to keep their money in Banks however widespread saving without spending has frozen monetary circulation as a result no matter how much money the Central Bank prints both businesses and households use it to repay debts rather than for consumption and investment furthermore the trend of early repayment of mortgages is intensifying in April this year the prepayment rate of Residential Mortgages reached a historic high of 37% analysts believe that as a result whether it's deposit rates or loan rates the public generally expects further declines in the future Banks continuously withdrawing highin deposit products and high yield wealth management products are preparing ing for the arrival of a low interest rate era perhaps an era where nothing earns profit is truly approaching the Chinese economy is deteriorating Financial risks are increasing and Banks and other institutions are under tremendous pressure ing to Media reports China's banking industry is undergoing an unprecedented reshuffle within a 7-Day period ending June 21st 40 rural small and medium-sized banks have been absorbed merged or dissolved including 25 rural commercial Banks and 15 Village Banks among them inner Mongolia jangi Village Bank was dissolved and acquired by OS Bank mingang bank acquired Village Bank and established a branch dongan rural Commercial Bank also absorbed Village Bank and dang dalang dong Ying Village Bank especially recently theing rural Commercial Bank has been approved to absorb and merge 36 small and medium Rural Bank institutions at the end of May the rural small and mediumsized Bank supervision Department of the China Banking and insurance Regulatory Commission published a signed article stating its intention to promote the reform and risk reduction of rural small and medium-sized Banks specific measures include promoting the merger and restructuring of rural small and medium-sized Banks and reducing the number and hierarchy of rural small and medium-sized Bank institutions and strengthening centralized and unified management ing to recent disclosures from the China Banking and insurance Regulatory Commission at the end of of 2023 there were 4,490 financial institution legal entities in the Chinese banking industry this marks a consecutive 2-year decrease from 2022 industry insiders predict that by the end of 2024 the list of independent legal entities in the Banking and Financial industry will further shrink with rural small and medium-sized Banks and Village Banks still accounting for a significant portion since the beginning of this year regulatory authorities have approved the acquisition of over 20 Village Banks and more than 10 Village banks have undergone Transformations through Village upgrades and Village splits additionally data disclosed by the China Banking and insurance regulatory commission's Financial license information shows that in the first 5 months of this year over 12200 banking Branch institutions Nationwide have exited the market marking a 30% increase compared to the same period last year exiting from this Market agricultural commercial Banks and Rural credit cooperatives account for a significant portion there are 527 agricultural commercial Banks accounting for 42% and 266 Royal Credit cooperatives and their branches accounting for 21% together they account for the high proportion of 63% some agricultural commercial banks have closer subsidiary branches in batches in addition the number of Branch institutions exiting the market for state-owned major Banks joint stock Banks City commercial Banks and Village Banks respectively account for 18% 7.5% 6.5% and 2.7% furthermore 16 foreign banks six policy Banks and five rural Cooperative Bank branches have also exited the market meanwhile the number of newly established banking institutions Nationwide is also decreasing data released by the banking regulatory Bureau shows that a total of only 894 Bank branches were stablished in the first 5 months of 2024 Lo pong from the China postal Savings Bank research Institute commented that the banking industry's net interest margin is at a low level profitability is declining which increases the pressure for Capital replenishment following some Branch institutions to exit the market can reduce Banks operating costs on March 19th Jo Jang Bank announced its performance forecast stating that its net profit for 2023 is expected to decrease by not less than 30% year on-ear ing to Mainland media reports joj bank's non-performing loan ratio has been rising for two consecutive years increasing 2% in the third quarter of last year and its provision coverage ratio has been continuously declining the provision coverage ratio reflects the bank's ability to cover potential loan losses also known as the adequacy ratio Enterprise early warning data shows that as of the end of September last year Jo Jang bank's non-performing loan balance was 6.8 billion R&B and the non-performing loan ratio was 2. . 27% with a provision coverage ratio of 133% The Economist reported that Jo Jang Bank rarely informed investors that due to poor loan performance its profit for 2023 May decrease by 30% which is typically undisclosed by Mainland Chinese Banks the report said that Chinese Banks lent bad loans to asset management companies as a way to handle their bad loans the contracts signed by both parties attempt to avoid purchasing bad loans that may have credit risks but due to confidentiality Clauses the details of such transactions have not been disclosed to the public even to the courts Banks involved in such transactions appear to be addressing their bad debt problems but in fact they're concealing the issue of bad debts Ben choan Wang professor at the Department of Finance at the National University of Singapore business school assistant professor Rong and associate professor me Mong from the business of Finance at Remy University of China warned that over time these problem loans will continue to accumulate L for hundreds of banks in China there are like time bombs waiting to go off [Music]