The current round of bank deposit rate cuts, in order to stabilize interest margins and thereby ensure the sound operation of commercial banks, continue to increase the support for real economy financing is of great significance. This round of bank deposit rate cuts is expected to basically offset the impact of various loan rate cuts on net interest margins.
According to Caixin, as of October 21, after China Merchants Bank and Ping An Bank took the lead in lowering the deposit benchmark interest rates on October 18 and 19, as of the time of publication, China CITIC Bank, China Everbright Bank, and China Minsheng Bank, along with 7 other joint-stock banks, announced today the reduction of deposit benchmark interest rates. Overall, the 9 joint-stock banks that have already reduced rates, their time deposit rates have the same highest reduction as major banks, both at 25 basis points.
Industry insiders told Caixin that the joint-stock banks' follow-up rate cuts are in line with policy guidance and their own need to stabilize interest margins. It is expected that small and medium-sized banks will follow up gradually. The current round of bank deposit rate cuts, in order to stabilize interest margins and thereby ensure the sound operation of commercial banks, continue to increase the support for real economy financing is of great significance.
7 joint-stock banks announced today the reduction of the fixed deposit benchmark interest rates, with the highest decrease being 25 basis points.
Multiple joint-stock banks have followed suit in lowering their deposit benchmark interest rates. As of the time of publication, according to Caixin's journalist's statistics, a total of China CITIC Bank, China Everbright Bank, Hua Xia Bank, Minsheng Bank, China Guangfa Bank, Shanghai Pudong Development Bank, and Industrial Bank have updated their new deposit benchmark interest rates, which will take effect from October 21.
In addition to the already lowered rates at China Merchants Bank and Ping An Bank, up to now, a total of 9 joint-stock banks have followed suit in lowering their deposit benchmark interest rates. Overall, for joint-stock banks that have updated their deposit benchmark interest rates, the reduction in time deposit rates is basically the same as major banks. For example, China Everbright Bank's fixed-term deposits from 3 months to 5 years will have their benchmark interest rates adjusted to 0.85%, 1.1%, 1.3%, 1.35%, 1.55%, and 1.6% respectively starting from October 21.
Furthermore, Minsheng Bank's fixed-term deposits from 3 months to 5 years will be adjusted from 1.1%, 1.35%, 1.55%, 1.55%, 1.8%, and 1.85% down by 25 basis points to 0.85%, 1.1%, 1.3%, 1.3%, 1.55%, and 1.6%, starting from October 21.
As of the time of publication, among the joint-stock banks, CBHB, Hengfeng Bank, and China Zheshang Bank's official websites have not yet updated their new deposit benchmark interest rates. For example, China Zheshang Bank's time deposit benchmark interest rates from July 29 were 1.1%, 1.35%, 1.55%, 1.7%, 2.05%, and 2.1% for periods of 3 months to 5 years.
Industry insiders: The recent reduction in deposit interest rates can basically offset the impact of various loan interest rate reductions on interest margins.
On October 18, the Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank and other state-owned large banks proactively lowered their deposit benchmark interest rates based on the current situation and their operational needs. Industry insiders told Caixin reporters that the six major banks and CM Bank have lowered their deposit benchmark interest rates, in line with policy guidance and their own need to stabilize interest margins, and it is expected that various banks will follow suit.
Zhou Maohua, a macro researcher at China Everbright Bank's Financial Markets Department, also believes during an interview with Caixin reporters that the six major banks lowering their deposit benchmark interest rates indicates the start of a new round of bank deposit reductions, with subsequent small and medium-sized banks expected to follow suit. Currently, there is a structural imbalance in the deposit market, with banks generally facing pressure on net interest margins and a downward shift in market interest rates.
"Banks adjusting deposit interest rates reasonably helps alleviate the overall liability costs and net interest margin pressure of banks, enhancing the profitability and operational stability of banks. Coupled with the steady economic recovery, banks are improving their operations and efficiency, which is bullish for market expectations of bank development," added Zhou Maohua.
"The current new round of deposit interest rate reductions by banks, aimed at stabilizing interest margins and ensuring the stable operation of commercial banks, is of great significance for further increasing support for financing the real economy," determined Wang Qing, Chief Macro Analyst at East Money. This round of bank deposit rate cuts can basically offset the impact of various loan interest rate reductions on net interest margins.
Analyst Xiao Yu from Zhongtai Securities stated that against the backdrop of cost reduction, continuous reductions in policy rates and loan benchmark rates, the reduction in deposit interest rates is to provide space for banks to maintain a 'reasonable profit'. Based on calculations, this deposit benchmark interest rate cut is expected to reduce the interest rates on interest-bearing liabilities of listed banks by 10-20 basis points. Banks with a higher proportion of fixed-term deposits will experience a larger reduction. After this round of deposit and loan rate cuts, most listed banks' net interest margins will still narrow, but the extent of narrowing will not be significant.
