According to Caixin News on October 22nd (Reporter Si Sitong), as a new round of deposit interest rate cuts unfolds, some special deposit products of banks are also being adjusted accordingly. On October 22nd, Bank of Beijing lowered its deposit list interest rates and simultaneously reduced the two-year rate of the Dinghuiying product.

Specifically, in this adjustment, Bank of Beijing has reduced the deposit list interest rates for various periods from three months to five years by 25 basis points each. The two-year fixed deposit list interest rate and the same-term Dinghuiying product rates of the bank have both been reduced from 1.7% to 1.45%.

It is worth mentioning that Bank of Beijing had already closed the Dinghuiying product signing function through all channels in December 2019; currently, only customers who had already activated this service can use it normally. However, during the recent six rounds of interest rate cuts, Bank of Beijing has been continuously adjusting the rates of this product in sync.

According to industry insiders, Bank of Beijing's current adjustment is a follow-up action to the new round of deposit rate cuts initiated by the state-owned major banks a few days ago. The speed of small and medium-sized banks' reductions in deposit rates has significantly accelerated in the recent two rounds, with Bank of Beijing reducing the rates of related deposit products primarily to comply with policy direction and further optimize deposit structure. Subsequently, small and medium-sized banks are expected to follow suit gradually, and the rates of related special deposit and other products will also be adjusted downwards accordingly.

The rates of discontinued business continue to decline, with the two-year Dinghuiying rate dropping to 1.45%.

"Starting from October 22, 2024, Bank of Beijing announced that the RMB two-year Dinghuiying product rate will be 1.45% per annum."

According to Bank of Beijing customer service, the Dinghuiying product is a RMB deposit product that is based on fixed-term deposit products with additional functionalities such as automatic generation, automatic early withdrawal, and "automatic interest settlement at the end of each fixed term cycle, multiple automatic early withdrawals (optional), and early withdrawals calculated based on the RMB current deposit list interest rate on the early withdrawal date".

However, currently Bank of Beijing's Dinghuiying product can no longer be newly purchased. "Due to business adjustments, our bank has closed the signing function of the Dinghuiying product channels since December 26, 2019. Clients who have activated the Dinghuiying business can still use it normally," customer service stated.

Caixin reporters noticed that despite the discontinued sale of this product, Bank of Beijing has been continuously adjusting its interest rates in recent years.

The official website shows that since October 2022, Bank of Beijing has lowered the Dinghuiying product interest rates in at least 6 announcements. In October of that year, the 2-year Dinghuiying product had an interest rate adjustment to 2.40% annually. After 5 more adjustments, it has now dropped to 1.45%.

According to Zhou Maohua, a macro researcher in the financial market department of China Everbright Bank, although the aforementioned product is no longer for sale, some existing customers can still continue to use it. As deposit rates keep decreasing, Bank of Beijing also needs to adjust the product's interest rates. This current adjustment is a follow-up to the recent wave of deposit rate cuts initiated by major state-owned banks.

Since the establishment of the market-oriented deposit rate adjustment mechanism in April 2022, led by state-owned banks, the lowering of the deposit benchmark interest rates has undergone six rounds of reductions, taking place in September 2022, and in June, September, December 2023, and July, October 2024. Comparatively, Bank of Beijing's adjustments to Dinghuiying product rates also align with these timelines.

Deposit rates are decreasing synchronously, speeding up the transmission of the interest rate cut wave.

In fact, on October 18th not long ago, the six major state-owned banks synchronized a reduction in the deposit benchmark interest rates, triggering a new round of interest rate cuts. Subsequently, major joint-stock banks quickly followed suit, and today Bank of Beijing disclosed the latest renminbi savings deposit rate table and made adjustments to the 2-year Dinghuiying product rate as well.

Currently, Bank of Beijing has decreased the three-month, six-month, one-year, two-year, three-year, and five-year fixed deposit benchmark rates by 25 basis points to 0.85%, 1.10%, 1.30%, 1.45%, 1.55%, and 1.60% respectively. Among them, the 2-year fixed deposit benchmark rate at the bank is at the same level as the Dinghuiying product rates for the same period.

"Compared to before, the speed of interest rate reduction for small and medium-sized banks has accelerated significantly in the past two rounds, and Bank of Beijing quickly responded by lowering the interest rates of related deposit products, mainly to comply with policy orientation and optimize the deposit structure," said Wang Pengbo, the chief analyst of Broadcom Financial Consultancy."

In his view, on the one hand, lowering deposit rates can encourage funds to flow from the banking system to the real economy and capital markets, stimulate corporate investment and consumer spending, help drive economic recovery and growth; on the other hand, amidst greater downward pressure on loan interest rates and lower asset yields, it is beneficial for banks to optimize their deposit structure, alleviate the current trend of deposit regularization and pursuit of high interest rates, and maintain stable net interest margins.

At the same time, Zhou Maohua further pointed out that the deposit market is currently structurally imbalanced. Recently, the six major banks lowered the deposit benchmark interest rates, signaling the beginning of a new round of bank deposit rate cuts. Subsequently, major joint-stock banks, as well as some city commercial banks and Bank of Beijing, quickly followed suit, further accelerating the transmission efficiency of this round of adjustment.

Looking ahead, Zhou Maohua believes that small and medium-sized banks are expected to follow suit in stages by lowering the deposit benchmark interest rates. At the same time, under the new round of interest rate cuts, the interest rates of products such as feature deposits with relatively high interest rates at banks will also be subsequently lowered.