Chinese Commercial Banks Lower Deposit Interest Rates Starting Today

10bp Cut in 1-Year Fixed Deposit Rate

Major Chinese commercial banks will lower deposit interest rates starting from the 1st.

According to local Chinese media on the day, several commercial banks with nationwide branch networks have decided to reduce fixed deposit interest rates by 10 basis points (1bp = 0.01 percentage points) for a 1-year term.

For a 2-year term, the rate will be lowered by 20bp, and for 3-year and 5-year terms, the rates will be reduced by 25bp.

Currently, the deposit interest rates at commercial banks are 1.65% for a 1-year term and 2.05% for a 2-year term. The rates for 3-year and 5-year terms are 2.45% and 2.5%, respectively.

This is the first time in three months that Chinese commercial banks have cut deposit interest rates since the reduction in June. This move appears to be in response to the recent cut in the loan prime rate (LPR), which is effectively the benchmark interest rate, by the central bank, the People's Bank of China. On the 21st, the People's Bank of China lowered the 1-year LPR by 0.1 percentage points to 3.45% per annum, while the 5-year LPR, known as the benchmark for mortgage loans, was kept steady at 4.2% per annum. Following the LPR cut, major banks are expected to soon reduce mortgage loan interest rates.

The reduction in banks' net interest margin (NIM) is also analyzed as a factor behind commercial banks lowering deposit interest rates. As of the end of June, Chinese banks' NIM stood at 1.74%, down 0.17 percentage points from 1.91% at the end of last year.

This content was produced with the assistance of AI translation services.