Issuance of negotiable certificates of deposit heats up, with banks’ liability structures continuing to change.

Recently, the issuance of interbank certificates of deposit has significantly heated up.

Hub statistics show that as of the end of May, the issuance scale of interbank CDs this year has exceeded 12 trillion yuan, making it one of the largest types in the bond market; just last week, the total issuance of interbank CDs in the market approached 1 trillion yuan, marking a new high for a single week this year.

From the market's perspective, this surge in CD issuance is not only related to cross-month liquidity disturbances, but also reflects new changes emerging in banks' liability structures.

Over the past two years, with continuous high growth in household savings and the reversal of "deposit transfers," the banking system as a whole was not lacking in liabilities.

At that time, household risk appetite declined, large amounts of funds flowed back into the banking system, driving continuous expansion of deposit scale; net financing of interbank CDs remained low for a long period, sometimes even negative, and banks' reliance on market-based liability instruments clearly decreased.

However, since the second quarter of this year, some marginal changes have appeared on banks' liability sides.

On the one hand, payment for taxes, concentrated payment of government bonds, and cross-month factors combined to marginally tighten interbank market liquidity; on the other hand, growth in household deposits also showed signs of slowing.

Data disclosed by the central bank show that as of the end of April, personal deposits decreased by nearly 2 trillion yuan compared to the end of March.

With deposit rates continuing to decline, some household funds have started to flow back into wealth management, bond funds, gold, and other assets; the "reservoir" of household deposits that supported stable expansion of bank liabilities in recent years is gradually loosening.

Against this backdrop, banks' demand for interbank financing has rebounded.

Compared to household deposits, interbank CDs are typical market-based liability instruments, with shorter maturities, more flexible issuance, and more suitable for dealing with short-term liquidity fluctuations. Therefore, after marginal disturbances in liquidity increased, banks have intensified their CD issuance efforts.

From the recent issuance structure, the "short-termization" characteristic of banks' liability sides is also apparent.

Recently, a large number of banks have issued interbank CDs with maturities concentrated between 3 and 6 months; the CDs issued by major institutions such as Industrial and Commercial Bank of China, Bank of Communications, and Guangfa Bank are all less than half a year. This means banks currently prefer managing liquidity with short- and medium-term financing tools, rather than locking in long-term liabilities on a large scale.

Meanwhile, the market has started to differentiate pricing for liabilities of different types of banks.

From issuance rates, large banks' interbank CD rates generally stay around 1.45%, whereas some smaller banks' rates are relatively higher. Differences in interbank credit quality and liability capabilities are gradually reflected via market-based financing instruments.

It is noteworthy that interbank CD rates are still at relatively low levels; recently, some 3-month CDs were even issued at rates below the 7-day reverse repo policy rate, indicating that short-term funds in the interbank market remain quite ample.

This means that this round of CD issuance does not imply tighter liquidity across the banking system, but appears to be proactive management amid adjustments in banks' liability structures.

In fact, compared to marginal changes on the liability side, bigger changes in the banking system may originate from the asset side.

In the first four months of this year, the incremental increase in social financing was nearly 90 billion yuan less year-on-year; new RMB loans in April saw a temporary decline, and corporate medium- and long-term loan growth slowed markedly.

For many years, real estate and infrastructure have played important roles in bank credit expansion. But as economic restructure continues, expansion in traditional high-credit demand sectors is slowing, and banks' asset allocation logic is also changing.

During this process, the importance of bond investment, interbank assets, and liquidity management has increased, and market-based liability instruments have been further strengthened in banks' balance sheets.

To some extent, the current boom in interbank CD issuance is not simply a short-term liquidity fluctuation.

It is more like a signal—

As the traditional credit expansion model gradually slows, the Chinese banking industry is moving from the previous "deposit-loan" driven model to a new stage that places more emphasis on balance sheet structure, liquidity management, and market-based financing.

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