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China Fund News reporter Zhang Ling

Following the collective announcement by the six major state-owned banks to reduce deposit rates, on July 26, two joint-stock banks, China Merchants Bank and Ping An Bank, successively issued announcements to follow suit and reduce deposit rates.

China Merchants Bank and Ping An Bank cut deposit rates

An announcement on China Merchants Bank's official website showed that from July 26, the bank's current deposit rate was lowered by 5 basis points to 0.15%; the three-month, six-month and one-year deposit rates were all lowered by 10 basis points to 1.05%, 1.25% and 1.35% respectively; the two-year, three-year and five-year deposit rates were all lowered by 20 basis points to 1.45%, 1.75% and 1.80% respectively.

Ping An Bank also announced that it will adjust its RMB savings deposit interest rates from July 26, and the current deposit rate will also be reduced by 5 basis points to 0.15%; the adjusted three-month, six-month, one-year, two-year, three-year, and five-year time deposit rates are 1.10%, 1.35%, 1.55%, 1.60%, 1.80%, and 1.85%, respectively. Compared with the previous period, the one-year and below deposits are reduced by 10 basis points, the two-year deposits are reduced by 30 basis points, and the three-year and five-year deposits are reduced by 20 basis points.

There may still be banks following up

On July 25, the six major banks, Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank, Bank of Communications, and Postal Savings Bank of China, successively announced a reduction in the RMB deposit interest rate. This is the first time that the state-owned banks have reduced the RMB deposit interest rate this year, and it is also the fifth reduction since September 2022.

Among them, the listed interest rates of current deposits of Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank and Bank of Communications were all lowered by 5 basis points to 0.15%, the interest rates of three-month, six-month and one-year fixed deposits were all lowered by 10 basis points to 1.05%, 1.25% and 1.35% respectively; the interest rates of two-year, three-year and five-year fixed deposits were all lowered by 20 basis points to 1.45%, 1.75% and 1.80% respectively.

After adjustment, the listed interest rates for six-month and one-year fixed deposits and withdrawals of Postal Savings Bank of China are 1.26% and 1.38% respectively. The interest rates for other maturities are consistent with those of the other five major state-owned banks.

"Judging from previous experience, the deposit rate cut was implemented in batches in the order of large state-owned banks, joint-stock banks, and small and medium-sized financial institutions. It is expected that the deposit rate cut will also be implemented in this way this time." Lou Feipeng, a researcher at the Postal Savings Bank of China, bluntly stated that considering the low net interest margin of banks, when the large state-owned banks lower their deposit rates, the joint-stock banks quickly follow suit and lower their deposit rates, which will help stabilize the banks' net interest margins, and also help to better serve the real economy, reduce the financing costs of the real economy, and promote sustained economic recovery.

Zhou Maohua, a macro-researcher at the Financial Markets Department of China Everbright Bank, also believes that lowering the deposit rate will help further reduce the savings propensity of enterprises and residents, promote corporate investment and household consumption, promote the optimization of asset allocation, enhance the momentum of funds flowing into the capital market, help the stock market stabilize and rebound, increase the vitality of the financial market, and consolidate the upward trend of the economy.

"Judging from the current net interest margins of other large state-owned banks, and interest rate levels in the deposit market and financial market, it is expected that more banks will continue to follow suit, expanding space for financial institutions to further give concessions to the real economy," said Zhou Maohua.

Zhou Maohua also said that the adjustment is expected to have limited impact on ordinary depositors. Taking a deposit principal of 100,000 yuan as an example, if calculated as a one-year fixed deposit, the annual interest will be reduced by 100 yuan. "Residents can also diversify their asset allocation through over-the-counter bonds, wealth management, funds, etc., and it is expected that the comprehensive income of assets will not be greatly affected."

Editor: Xiaomo

Audit: Wooden Fish

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