Tagged: lending

The current “cabbage price” of margin lending rate

Recently, the rate of low-cost securities lending has appeared in the market. Dongfang wealth securities has lowered the rate of some securities sources to 2.99%, while the rate of securities lending in the industry is mostly above 8.35%.


According to the analysis of securities dealers, the demand and scale of securities lending are much smaller than financing, and most of the scarce securities sources have limited room for interest rate reduction. The main purpose of this move is to “attract customers at low prices” and attract attention.


However, it is an indisputable fact that the price war of securities companies is from trading commission to two financial interest rates. The two financing business of securities companies has gradually become one of the “main battlefields” for competing for incremental customers, binding stock customers and expanding market share. Faced with the pressure of Internet securities companies, how should traditional securities companies take over?


Oriental Fortune takes the lead in provoking the “price war” between the two financial institutions


The rate of securities lending was lowered to 2.99%, which is the recent advertisement of securities lending business made by Dongfang wealth securities. The rate of securities lending has set a new low in the industry.


According to the promotion materials of Oriental Fortune, the margin lending rate of SECCO SID, Weisheng information, Zejing pharmaceutical and other stocks decreased from 10.6% to 2.99%. Midea Group, Kouzijiao and other stocks margin rate down to 8.99%.


Not only is the interest rate of securities lending reduced this time, but Oriental Fortune is also the first securities company in the industry to reduce the financing interest rate. In 2017, Dongfang wealth securities lowered the benchmark financing interest rate from 8.35% to 6.99%, becoming the securities company with the lowest financing interest rate in the whole industry at that time.


In recent years, Dongfang wealth securities has been competing for a number of existing customers through low price strategy, expanding the market share of the two financial institutions. According to the unaudited and unconsolidated financial statements of Dongfang wealth securities in 2020, the balance of the company’s funds released at the end of 2020 was 29.691 billion yuan, an increase of 86.53% over the beginning of the year, and the scale of funds released increased significantly.


Gao Gao, chief analyst of non bank financial industry of Kaiyuan securities, said that the net capital of Dongfang wealth securities is relatively low, which limits the further development of its two financing business to a certain extent. However, as a listed company, Dongfang fortune, its parent company, has smooth financing, which will break the capital restriction and help Dongfang Fortune Securities to further improve the business scale and market share.


In November 2020, Dongfang fortune issued a convertible bond issuance plan with a scale of 15.8 billion yuan, which will be used to supplement the working capital of Dongfang Fortune Securities, a wholly-owned subsidiary of the company. Among them, no more than 14 billion yuan will be invested in credit trading business to expand the scale of margin trading business. At present, the convertible bond issuance plan has been approved by the Shenzhen Stock Exchange gem Municipal Committee.


With or without? Some traditional securities companies are passive


Industry insiders said that originally few securities companies would adjust the margin lending interest rate, and even some securities companies have not adjusted the margin lending interest rate since 2012. This practice of Dongfang fortune can be said to have produced a “catfish effect” in the industry, and improved the bargaining space of customers.


According to wind data, most of the securities companies that currently carry out margin trading business have a financing interest rate of 8.3%, while a few securities companies such as Kyushu securities have a financing interest rate of 7.5%. The margin rate is higher, mostly 10.35%.


With the “price war” of financing interest rate before, the two financing interest rates of some securities companies have been reduced one after another, and some of them have been as low as 6%. For example, Ping’an securities app shows that the annual interest rate of new customers’ financing is as low as 5.88%.


The current "cabbage price" of margin lending rate
However, there are still some securities companies sticking to the bottom line of interest rates. The reporter learned from the interview that the financing interest rate of most business departments is normally maintained at about 8%. Although it can be adjusted according to the specific situation, the requirements for customer funds are very high, “up to 6.5% of the interest rate, which at least requires more than 10 million funds.”


“If the interest rate is not lowered, the stock customers may be lost; but if the interest rate is lowered, where is the profit point?” The general manager of the business department of a medium-sized securities company said that unlike the profit model of Internet securities companies realized through traffic, traditional securities companies do two financing business to earn an interest margin, with the cost of about 4% to 5%, and this part of the income is not stable.


And in terms of margin lending rates alone, the general manager of the business department said, “the space for downward adjustment is relatively limited. Most securities companies’ self operated business scale is not large, and there are not many securities that can meet the margin lending requirements put forward by investors. More than 90% of customers are engaged in financing business, so it is of little significance to attract customers by reducing the rate of securities lending. ”


“If the securities companies only do homogeneous business, the competition will end in price reduction.” The manager of the brokerage business of a small and medium-sized securities company said, “the two finance business is a high-quality business that all securities companies are focusing on developing, because the risk is controllable and the income is relatively stable, but the business has the problem of high homogeneity. In the future, the transformation of wealth management is still a big trend, which is expected to bring new growth points to securities companies. “