Since the beginning of October, small and medium-sized banks have been quickly lowering their deposit interest rates in clusters. Geographically, this includes banks in multiple regions such as Guangdong, Hainan, Henan, Guizhou, Yunnan, and others, with some banks even reducing their deposit interest rates by as much as 50 basis points (bp).
The market believes that as the reduction in existing mortgage interest rates is about to be implemented, to alleviate the pressure on banks' net interest margins, there is still room for further reduction in bank deposit interest rates.
Intensive Reduction of Deposit Interest Rates by Small and Medium-Sized Banks
Recently, several small and medium-sized banks have announced adjustments to their Renminbi deposit挂牌 interest rates. It is reported that on October 14th, Qionghai Xingfu Rural Bank issued a notice stating that the interest rates for three-year and five-year fixed deposits have been adjusted to 2.5%, a decrease of 50 bp compared to the previous rate.
Henan Suiping Zhongyuan Rural Bank stated that starting from October 15th, the bank adjusted its Renminbi deposit挂牌 interest rates. After the adjustment, the bank's fixed deposit interest rates for three months, six months, one year, two years, three years, and five years are 1.3%, 1.55%, 1.70%, 1.8%, 2.15%, and 2.20%, respectively, which are 15, 15, 15, 25, 20, and 15 basis points lower than before.
Advertisement
It is worth mentioning that Henan Suiping Zhongyuan Rural Bank has reduced its one-year fixed deposit interest rate three times this year, from 2.25% at the beginning of the year to the current 1.7%, with a cumulative decrease of 55 bp.
Guangdong Qingxin Rural Commercial Bank also stated that starting from October 10th, the bank adjusted its Renminbi deposit挂牌 interest rates. The interest rates for three-month, six-month, one-year, and two-year deposits were all reduced by 20 bp, and the interest rates for three-year and five-year deposits were reduced by 40 bp. After the reduction, the corresponding deposit interest rates are 1.1%, 1.3%, 1.4%, 1.5%, 2.15%, and 2.15%.
Overall, the process of small and medium-sized banks reducing deposit interest rates has also accelerated in this round. Many small and medium-sized banks have once again reduced their deposit interest rates less than two months apart. In addition, after the state-owned large banks announced the adjustment of deposit interest rates on July 25th, within a few days, all joint-stock banks have completed the adjustment of deposit interest rates, and small and medium-sized banks have quickly followed suit.
There is still room for further reduction.
In the market's view, there is still room for further reduction in bank deposit interest rates.Zhao Lian's Chief Researcher Dong Ximiao stated that since the beginning of this year, the Loan Prime Rate (LPR) has decreased twice, and commercial banks have increased their efforts to reduce fees and concessions to the real economy, both of which inevitably exert pressure on bank profits and net interest margins.
"Although the financial regulatory authorities have previously rectified violations of manual interest compensation and some policy interest rates have been lowered, if profits and interest margins continue to decline, the pressure on banks to sustainably reduce fees and concessions and maintain stable development will be significant," Dong Ximiao pointed out that adjusting down deposit interest rates is also a reluctant but realistic choice for commercial banks.
Furthermore, with the upcoming implementation of the reduction in existing mortgage loan interest rates, this will further pressure the banks' net interest margins. Therefore, this will also motivate banks to continue lowering deposit interest rates to offset the impact of the upcoming downward trend in existing mortgage loan interest rates on net interest margins.
Looking ahead to the future trend of deposit interest rates, the Bank of China Research Institute predicts that the reduction in deposit interest rates is expected to be between 0.2 and 0.25 percentage points.