The six major state-owned banks officially announced the reduction of deposit interest rates, industry insiders: it will drive small and medium banks to continue to follow-Chinanews.com video

The six major state-owned banks officially announced the reduction of deposit interest rates, industry insiders: it will drive small and medium banks to continue to follow up

[Explanation]Six large state-owned banks in China, Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China, Bank of China, Bank of Communications, and Postal Savings Bank of China, collectively announced on June 8 that they would lower the listed interest rates for RMB deposits.

[Explanation]On June 9, the reporter called the customer service hotline of the relevant bank and learned that the six major banks have lowered the listed interest rates of demand deposits and some long-term limited deposits, ranging from 10-15 basis points.

[Concurrent]Customer Service of Agricultural Bank of China

If it is lump sum deposit and withdrawal, the reference is 1.65% for one year, 2.05% for two years, 2.45% for three years, and 2.5% for five years.

[Same period]China Construction Bank customer service

For the previous two years, it was 2.15%, for three years it was 2.6%, and for five years it was 2.65%.

[Concurrent]Bank of China Customer Service

If you deposit before June 7, it will be calculated according to the interest rate on the day of your deposit. If there is an interest rate adjustment, the interest will not be calculated in stages, and your deposit today will be executed according to the interest rate announced on June 8.

[Explanation]The six major banks collectively lowered the deposit interest rate, and the fixed deposit interest rate bid farewell to the “3 era”. Industry insiders told reporters that if you deposit 1 million yuan in five-year lump-sum deposits and withdrawals, the interest on hand will be reduced by about 7,500 yuan.

[Same period]Wang Qing, chief macro analyst of Dongfang Jincheng

Then the 5-year fixed deposit interest rate has been lowered by 0.15 percentage points this time, down to 2.5%. This means that if we deposit 1 million and deposit and withdraw in five years, the interest we get will be reduced by about 7,500 yuan.

[Explanation]Why did large commercial banks lower the deposit listing interest rate again? Industry insiders believe that loan interest rates have continued to decline from 2022 to now, and the interest rate spread of China’s banking industry has continued to decline in the first quarter of this year. The new round of deposit “interest rate cuts” aims to reduce the cost of bank liabilities and stabilize bank interest rate spreads.

[Concurrent]Yang Xite, a researcher at Anbang Think Tank

Since the beginning of this year, although the listed interest rate of commercial bank deposits has not been raised, the trend of fixed-term deposits is very significant, which directly leads to a substantial increase in the cost of deposits of banks, so the net interest margin of commercial banks is in a decline stage . At the same time, we can also see that savings deposits at the end of April have increased by 17.7% year-on-year (high growth), which is already at a very high level in the past 10 years.

[Same period]Wang Qing, chief macro analyst of Dongfang Jincheng

Since the second quarter, we have noticed that the property market has weakened again. This means that there will be a certain amount of downward space for the mortgage interest rate of residents in the future. From this point of view, the current reduction of the deposit interest rate by the bank is actually paving the way for the upcoming reduction of the loan interest rate and preparing for it. The advantage is that our loan interest rate will also go down in the future.

[Explanation]Yang Xite pointed out that large commercial banks are the main body of China’s banking industry, and their liabilities account for nearly half of the entire industry, and they have a decisive market influence. After large commercial banks lowered their listed deposit rates, it is expected that small and medium-sized banks will follow suit.

[Concurrent]Yang Xite, a researcher at Anbang Think Tank

So in the case of (interest spreads) continuing to narrow, small and medium-sized banks will definitely face greater pressure this year. In the case of continuous reduction of deposit interest rates, the reduction of deposit interest rates of large banks will definitely drive small and medium-sized banks to continue to follow up. Such follow-up will also help ease the pressure on the liability side costs of small and medium-sized banks and further reduce entity financing costs.

[Explanation]Wang Qing said that whether the deposit rate will continue to decline depends on the economic and price trends. In the current context, the majority of residents need to balance risks and benefits, and comprehensively allocate assets, wealth management products and monetary funds.

[Same period]Wang Qing, chief macro analyst of Dongfang Jincheng

Whether the deposit interest rate will continue to decline depends on the trend of the economy and prices. We judge that the recovery of the economy in the second half of the year should be gradually strengthened on the whole. In terms of future (funding) arrangements, everyone’s expectations in this regard can be more flexible. We still have to judge the latest situation based on the economic and price situation, instead of blindly thinking about it.

Reported by Chi Hanyu from Beijing

Responsible editor:[Luo Pan]