According to Jinshi.com, Li Yujia, chief researcher at the Housing Policy Research Center of Guangdong Provincial Urban Planning Institute, said that banks are currently facing a dilemma between expanding their market share and lowering interest rates. In the context of asset shortage, banks are competing for high-quality assets such as mortgages, while residents are mainly considering which bank has the lowest loan interest rate. Banks have to use measures such as lowering interest rates to win customers.
The interest rate cut will further reduce bank profits, and at the same time, as the non-performing rate of mortgage loans rises, losses are likely to expand. Ren Tao, a specially-appointed researcher at the National Finance and Development Laboratory, said that policy departments must also take action to avoid vicious competition among banks and to provide stronger guidance on the liability side to protect and stabilize the interest rate spread of the banking industry.
