Tianfeng Securities: It is expected that the interest rate reduction on deposits in 2026 will be implemented in accordance with the principle of asymmetry, and there is a high probability of it being implemented in the second quarter.

From the perspective of banks, Tianfeng Securities research report has the following judgments on the reserve requirement ratio and interest rate cuts in 2026: 1. It is expected that the LPR in 2026 will be lowered by 10-20 basis points, with a chance of landing in the first half of the year, with a relatively higher probability in the second quarter. First, it is expected that the pressure on bank interest rate differentials in 2026 will be significantly relieved compared to 2025, which could create some space for lowering the LPR. Second, there is a problem with the interest rates of new loans to high-quality enterprises deviating from the LPR benchmark anchor. Third, in 2025, the LPR may not have been executed in accordance with the basic principles of cost-plus method. 2. It is expected that there is a possibility of implementing the asymmetric principle for deposit rate cuts in 2026, with a higher probability of implementation in the second quarter. First, looking back at past measures to reduce deposit costs, it is more likely to occur in the second quarter, especially in April and May. Second, the reduction in deposit rates may adopt an asymmetric approach, focusing on reducing the longer end of the yield curve. Third, due to the expected broad interest rate downward cycle and anticipation of deposit rate cuts, there is still a strong demand for banks to actively reduce the duration of liabilities. 3. It is expected that there will be a necessary reserve requirement cut before the Spring Festival in 2026, with a range of 25-50 basis points. First, under the framework of structural liquidity shortage, the central bank needs to regularly conduct comprehensive reserve requirement cuts to replenish liquidity. Second, there is still some pressure on the asset-liability structure of banks in the first quarter of 2026, so reducing reserves before the festival is an option.