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What is the loan-to-deposit ratio? Adjustments to the loan-to-deposit ratio and their impact
What is the bank's loan-to-deposit ratio? The loan-to-deposit ratio is the ratio of total loans of commercial banks divided by total deposits, that is, total bank loans/total deposits. The loan-to-deposit ratio is related to the bank's funding flexibility and profitability. 1. From the perspective of bank profitability, the higher the loan-to-deposit ratio, the better, because deposits have to pay interest, which is the so-called capital cost. If a bank has a lot of deposits and few loans, it means that its cost is high, and With less revenue, the bank’s profitability is lower. 2. From the perspective of banks resisting risks, the loan-to-deposit ratio should not be too high, because banks also have to deal with daily cash withdrawals and daily settlements of their customers, which requires banks to keep a certain amount of cash deposit reserves (that is, banks maintain a certain amount of cash deposit reserves at the central bank or Commercial bank deposits), if the loan-to-deposit ratio is too high, this part of the funds will be insufficient, which will lead to a payment crisis in the bank. If the payment crisis spreads, it may lead to a financial crisis, which will be extremely harmful to the regional or national economy. If a bank fails due to a payment crisis, depositors' interests will also be harmed. Therefore, the higher the bank's loan-to-deposit ratio, the better. There should be a certain limit. In order to prevent banks from over-expanding, the central bank stipulates that the maximum loan-to-deposit ratio for commercial banks is 75.

Adjustments to the loan-to-deposit ratio and its impact Based on the above two points, the central bank has certain restrictions on the loan-to-deposit ratio of commercial banks. Generally speaking, the central bank adjusts bank deposit-to-loan ratios in the following two ways. One is to reduce the increase in loans; the other is to increase the increase in deposits. Loan income is the lifeblood of banks. It is unrealistic to reduce lending. Then all banks can and are willing to do is to absorb deposits with all their strength. Moreover, it is the practice of banks to encourage deposits. my country's expected annualized interest rates for deposits and loans are based on the benchmark expected annualized interest rate stipulated by the People's Bank of China. The net interest margin between commercial banks is NIM (Net Interest Margin, the ratio of the bank's net interest income to all the bank's interest-earning assets). There is basically no essential difference, so the profits of commercial banks are highly positively correlated with the amount of loanable funds. The larger the total deposits of a commercial bank, the higher the amount of loanable funds, and the greater its net interest income. Therefore, all commercial banks regard deposit absorption as a task. Large state-owned commercial banks have many outlets and their ability to absorb deposits is relatively strong, so their loan-to-deposit ratio is relatively low. For joint-stock commercial banks that do not have the advantage of branches, the task of collecting deposits mainly falls on the account managers. On the one hand, some commercial banks encourage loan customers to repay their loans in advance. They not only lower the minimum repayment amount from 50,000 yuan to 10,000 yuan, but also reduce the number of days for early repayment reservations from 1 month to 5 days. ; On the other hand, various preferential measures attract deposits. A regular business of the bank is that when the assets of deposit customers reach a certain amount, they can become the bank's VIP customers and enjoy various convenient and preferential services of the bank, such as no need to queue for deposits and withdrawals, no handling fees for inter-bank transfers, and three-level transfers. Free registration services at first-class hospitals and VIP waiting rooms, etc. This practice of soliciting deposits at high interest rates is illegal, and commercial banks will not openly touch this red line. When commercial banks have a marketing team of account managers, their methods of attracting deposits become more flexible, and the competition for attracting deposits becomes increasingly fierce. Although there is no way to verify it, the marketing measures that account managers usually take to complete the task of attracting deposits have become an open secret.