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<Research>M Stanley: Impact of PBOC's Rate/ RRR Cuts on CN Banks' NIMs May Be Limited; LPR Reduction Expected to Support NIMs
According to a report from Morgan Stanley, the 10 bp policy rate cut by the People's Bank of China (PBOC) was in line with the broker's full-year forecast of a 15-20 bp red...
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<Research>M Stanley: Impact of PBOC's Rate/ RRR Cuts on CN Banks' NIMs May Be Limited; LPR Reduction Expected to Support NIMs
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According to a report from Morgan Stanley, the 10 bp policy rate cut by the People's Bank of China (PBOC) was in line with the broker's full-year forecast of a 15-20 bp reduction.

In addition, the PBOC has also trimmed the deposit reserve ratio by 50 bps, dropped the structural monetary policy instruments rate (including PSL) by 25 bps, and further reduced deposit rates, which should help lower financing costs.

Related NewsJPM: PBOC Pumps RMB2.1T into Mkt by RRR Cut, Expanded Re-lending Tools; Limited Impact on CN Banks' NIMs
In the broker's estimate, these measures will have only a limited impact on Chinese banks' net interest margins (NIMs). It believed that the PBOC's adoption of a more rational policy approach demonstrated policymakers' efforts to prioritize the protection of Chinese banks' NIMs. These efforts should help reduce financing costs for the real economy and support credit growth.

The broker also anticipated China to cut LPR by 15-20 bps in 2025 to support Chinese banks' NIMs and banks' ability to support credit growth and absorb risks amid rising global uncertainties.

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