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Following the steps of state-owned banks, the deposit interest rates of joint-stock banks also fell as expected. On July 26, a Beijing Business Daily reporter noticed thatChina Merchants Bank、Ping An BankTwo joint-stock banks have lowered their RMB deposit rates by up to 30 basis points (bp). Just the day before, the deposit rates of six state-owned banks had already seen a wave of adjustments. Analysts predict that in the next stage, with financial concessions to the real economy and banks' net interest margins continuing to be under pressure, the downward trend in deposit rates will remain the general trend.

The two joint-stock banks also lowered their

The deposit interest rates of joint-stock banks have also dropped! On July 26, China Merchants Bank updated its RMB deposit interest rates.

According to the information on China Merchants Bank's official website, the bank's current deposit interest rate was lowered by 5 basis points, from 0.20% to 0.15%. The deposit interest rates for 3-month, 6-month and 1-year deposits were all lowered by 10 basis points to 1.05%, 1.25% and 1.35%; the deposit interest rates for 2-year, 3-year and 5-year deposits were all lowered by 20 basis points to 1.45%, 1.75% and 1.80%. The interest rates for zero-deposit and full-withdrawal, full-deposit and zero-withdrawal, and deposit and interest withdrawal deposits were also lowered. Taking the 3-year deposit as an example, the interest rates for the above three types of deposits are all 1.25%, a decrease of 10 basis points from 1.35% before the adjustment.

Ping An Bank also announced that it would adjust the bank's RMB deposit interest rates from July 26. After the adjustment, the 3-month, 6-month, 1-year, 2-year, 3-year and 5-year time deposit interest rates are 1.10%, 1.35%, 1.55%, 1.60%, 1.80% and 1.85%, respectively, down 10 basis points, 10 basis points, 10 basis points, 30 basis points, 20 basis points and 20 basis points from before the adjustment.

At the same time, Ping An Bank also lowered its interest rates for zero-deposit and lump-sum withdrawal, lump-sum deposit and zero-withdrawal, and deposit and interest withdrawal. The 1-year, 3-year, and 5-year interest rates are 1.05%, 1.25%, and 1.25%, respectively. The interest rates before the adjustment were 1.15%, 1.35%, and 1.35%, respectively. As of press time, the deposit interest rates of the other 10 joint-stock banks have not been adjusted.

One day ago, six state-owned banks had jointly cut interest rates. 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, collectively lowered their deposit interest rates by 5-20 basis points. Among them, the 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 lowered by 5 basis points to 0.15%, and the interest rates of 3-month, 6-month, and 1-year deposits were all lowered by 10 basis points to 1.05%, 1.25%, and 1.35%, respectively; the interest rates of 2-year, 3-year, and 5-year deposits were all lowered by 20 basis points to 1.45%, 1.75%, and 1.8%, respectively.Postal Savings BankThe listed interest rates for 6-month and 1-year fixed deposits and withdrawals were adjusted to 1.26% and 1.38% respectively, and the interest rates for other terms were consistent with those of the other five banks.

Minsheng BankChief Economist Wen Bin said that this round of deposit rate cuts is the fifth round of active adjustments made by commercial banks based on their own operating conditions and market conditions after the establishment of the deposit rate market-oriented adjustment mechanism. It is an independent decision made by the six major banks based on the recent decline in the 1-year LPR and the trend of market interest rates such as treasury bond yields, which is a reflection of the more market-oriented deposit rate. This adjustment is conducive to stabilizing the bank's liability costs and improving the sustainability of financial services for the real economy; it is conducive to promoting investment and consumption of enterprises and residents, helping to stabilize the economy and improve efficiency; at the same time, under the new monetary policy regulation framework, with the 7-day reverse repurchase rate as the benchmark, the interest rate transmission relationship from short to long is also gradually being unblocked.

The downward trend of deposit interest rates is still the general trend

In April 2022, the People's Bank of China guided the interest rate self-discipline mechanism to establish a market-based adjustment mechanism for deposit interest rates. In order to strengthen the interest rate marketization process and optimize the liability cost management of the banking system, the deposit "interest rate cut" channel was opened. After that, major banks in my country carried out multiple rounds of deposit interest rate cuts.

The interest rate cut will help reduce the bank's liability costs, improve net interest margin and profitability. According to data from the State Administration of Financial Supervision and Administration, in the first quarter of this year, the bank's net interest margin was 1.54%, which fell to a low level. The market generally believes that in the next step, banks will continue to take more measures, including lowering deposit rates and optimizing deposit structures, to ease the pressure on net interest margins and improve profitability. At the 2023 performance conference, the management of several banks also revealed that in order to reduce funding costs and improve operating efficiency and service quality, they will continue to pay attention to market trends and adjust deposit product pricing in a timely manner based on liability costs and maturity structures.

Talking about the impact of this round of deposit rate cuts on all parties, Wen Bin pointed out that assuming that all time deposits are subject to the listed interest rate, it is estimated that this round of interest rate cuts will reduce the sample bank's liability cost by about 6bp and improve the interest margin by about 5.6bp. In terms of bank types, due to the high proportion of time deposits in state-owned banks and rural commercial banks, their liability cost reduction and interest margin improvement may be more obvious. The cost of interest-bearing liabilities of state-owned banks decreased by 6.2bp and the net interest margin improved by 5.7bp; the cost of interest-bearing liabilities of joint-stock banks decreased by 5.4bp and the net interest margin improved by 5.3bp; the cost of interest-bearing liabilities of city commercial banks decreased by 5.7bp and the net interest margin improved by 5.9bp; the cost of interest-bearing liabilities of rural commercial banks decreased by 7.2bp and the net interest margin improved by 6.9bp.

Wen Bin further emphasized that in the next stage, as the financial sector gives up profits to the real economy and banks continue to face pressure on their net interest margins, the downward trend in deposit interest rates is still the general trend. The continuous downward trend in interest rates on new and existing loans has also increased the necessity for banks to continue to control their liability costs. It is expected that the subsequent self-discipline management of deposit pricing will be further improved, and there is still room for deposit interest rates to be lowered.

Ai Yawen, an analyst at Rong360 Digital Technology Research Institute, predicted that after state-owned banks lowered their deposit listing rates, joint-stock banks followed suit, and the magnitude was basically the same, reflecting the coordinated actions of the banking industry under policy guidance and the market interest rate self-discipline mechanism. The LPR reduction this time was relatively large, and more commercial banks and city commercial banks may follow suit in the future. In the short term, banks may face the dual effects of lower funding costs and boosted loan demand. In the long run, the reduction in deposit rates will help banks optimize their asset-liability structure, reduce liability costs, and promote stable economic growth; at the same time, banks need to strengthen risk management to ensure that asset quality is not affected in an environment of interest rate changes, which is conducive to maintaining the sound operation of the banking system.

Beijing Business Daily reporter Song Yitong