①The rate reduction of this round of medium- and long-term deposit listing is greater, and the improvement of interest margin for some time deposit accounts, especially for those with high proportion of medium- and long-term varieties, of urban and rural commercial banks may be more obvious. However, the repricing period of the deposits is longer, and it is expected that the impact will be more reflected next year; ②This adjustment is conducive to stabilizing the bank's liability cost and improving the sustainability of financial services for the real economy.
On July 30th, according to Cailian Press, after the adjustment of the deposit listing rates of large and joint-stock banks was completed, some listed city commercial banks also followed the adjustment. Cailian Press reporters found that Jiangsu Bank has just made a new adjustment, and the maximum decrease in RMB savings time deposits for the full amount is 20BP. In addition, Xiamen Bank will adjust the listing interest rates of some corporate deposits from August 1st.
Industry insiders told Cailian Press that the adjustment of deposit rates for local banks generally lags behind that of national banks. Banks reduce deposit rates to reduce bank liability costs, stabilize bank interest margins, and the rate reduction range of the long-term deposit is more, which varies from bank to bank. The adjustment situation and adjustment range will also be based on their own and reference to similar bank situations.
Jiangsu Bank has completed the adjustment, and the decrease in the listing rate of the time deposit is 10-20BP.
On July 29th, Jiangsu Bank updated the RMB savings deposit listing rate after the adjustment. Jiangsu Bank staff told Cailian Press reporters that before the adjustment, the full amount of time deposit listing rate for the bank was: 3 months 1.2%, 6 months 1.45%, 1 year 1.55%, 2 years 1.85%, 3 years 2.15%, and 5 years 2.15%. The adjustment range of the RMB savings time deposit listing rates for different terms of Jiangsu Bank is the same as that of the large bank, and the one-year or shorter term decreased by 10 basis points, while the two-year, three-year, and five-year terms decreased by 20 basis points.
By comparison, the adjustment range of the full amount of time deposit listing rates at different periods of Jiangsu Bank is the same as that of large banks. Specifically, the time deposit listing rates for 1 year and below decreased by 10 basis points, and the time deposit listing rates for 2 years, 3 years and 5 years all decreased by 20 basis points.
In addition to Jiangsu Bank, Cailian Press reporters found that Xiamen Bank, one of the listed city commercial banks, will also adjust the deposit listing rates, but the bank's adjustment is for the corporate deposit listing rates. According to the latest announcement by Xiamen Bank, the bank will adjust the listing rates of some corporate deposits from August 1, 2024. As for the full amount time deposit, the listing rates of 3 months, 6 months, and 1 year corporate deposits will each be reduced by 10 basis points to 1.2%, 1.45%, and 1.6%; the listing rates of 2 years, 3 years, and 5 years corporate deposits will be reduced by 20 basis points, to 1.75%, 2.05%, and 2.1%, respectively.
As of the deadline for this article, most listed city commercial banks have not yet adjusted personal RMB deposit listing rates. Cailian Press reporters found that among listed city commercial banks that have not been adjusted for the time being, the deposit listing rates at different periods are slightly different. Among them, the listed Zhengzhou Bank had higher deposit rates for some periods, as follows: 2 years 2.00%, 3 years 2.30%, and 5 years 2.30% since January 4, 2024; Chengdu Bank currently has a listing rate of 2.25% for 2 years and 2.6% for 3 years and 5 years respectively. Although some banks have not yet adjusted, the listing rates of long-term deposits are already close to those of some recently adjusted joint-stock banks. For example, Bank of Beijing will start from January 10, 2024, with the listing rates of 3 years and 5 years full amount time deposit being 2% and 2.05%, respectively.
The reduction of medium- and long-term rates is greater. Insiders believe that the improvement in interest margin for urban and rural commercial banks, especially those with relatively high proportion of medium- and long-term term varieties, or more obvious. However, the repricing period of the deposits is longer, and it is expected that the impact will be more reflected next year.
On July 25th, the six large banks announced the adjustment of deposit listing rates. The interest rates for demand deposits dropped by 5 basis points, while the interest rates for the notice deposit, agreement deposit and the time deposit of one year or less were reduced by 10 basis points, and the interest rates for the time deposit of two years or longer were reduced by 20 basis points. The following day, two joint-stock banks, China Merchants Bank and Ping An Bank, followed the adjustment. On July 29th, the remaining 10 joint-stock banks have followed the downward adjustment of deposit listing rate.
"According to historical experience, small and medium banks will gradually follow suit after state-owned commercial banks start the rate reduction." Shen Juan, an analyst at Huatai Securities, said that the central bank emphasized the implementation of the deposit interest rate marketization mechanism in the monetary policy report for the first quarter, and prevent high-interest-rate deposit taking, and focus on stabilizing banks’ liability costs. This round of deposit rate adjustment eases the pressure on bank interest margins and protects bank profitability.
From the perspective of the rate cut, the reduction of medium- and long-term deposit listing rates in this round is greater. Shen Juan believes that the improvement of interest margin for urban and rural commercial banks, especially those with relatively high proportion of medium- and long-term term varieties, may be more obvious. However, the repricing period of the deposits is longer, and it is expected that the impact will be more reflected next year.
Wen Bin, chief economist of China Minsheng Bank, told Cailian Press that this round of deposit rate cuts is the fifth voluntary adjustment made by commercial banks based on their own operating conditions and market conditions after the establishment of the deposit rate market-oriented adjustment mechanism. This adjustment is conducive to stabilizing the bank's liability cost and improving the sustainability of financial services for the real economy, as well as promoting investment and consumption of enterprises and residents to help stabilize the economy and improve efficiency.
Looking ahead, Wang Qing, chief macro analyst at Oriental Jincheng, believes that after the adjustment of deposit rates of state-owned large banks, other commercial banks will follow suit to cut rates. Taking into account the future economic and price trends, it is determined that there is still room for policy rates (7-day reverse repo rate) to be lowered in the fourth quarter, which will drive the follow-up adjustment of two-term LPR quotes. "In this way, there is still a possibility of launching a new round of deposit rate cuts around the end of the year," Wang Qing said.