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China Fund News reporter Ma Jiaxin

After large state-owned banks and joint-stock banks lowered their deposit rates, small and medium-sized banks such as city and rural commercial banks in many regions also quickly followed suit.

On August 1, Changsha Bank issued an announcement stating that the bank would lower its deposit quoted interest rate by between 10 and 20 basis points; in addition, rural commercial banks, rural credit cooperatives and other financial institutions in Guangxi, Guangdong, Heilongjiang and other regions also announced that they would lower their deposit quoted interest rates from August 1, and some banks even reduced their deposit interest rates by as much as 70 basis points.

Small and medium-sized banks in many places quickly followed suit

Changsha Bank's announcement shows that from August 1, the bank adjusted the RMB deposit interest rates, including personal deposits and corporate deposits. After the adjustment, Changsha Bank's 1-year, 2-year, 3-year, and 5-year personal deposit interest rates are 1.7%, 1.8%, 2.15%, and 2.15%, respectively. Compared with the corresponding term interest rates at the beginning of the year, the bank lowered them by 10, 20, 20, and 20 basis points, respectively.

A few days ago, Xiamen Bank and Jiangsu Bank also launched "interest rate cuts". For example, on July 29, Jiangsu Bank updated and adjusted its deposit interest rates. After the adjustment, the bank's deposit and withdrawal interest rates are 1.45% for 1 year, 1.65% for 2 years, 1.95% for 3 years, and 1.95% for 5 years, down 10, 20, 20, and 20 basis points respectively, and consistent with the interest rate standards of state-owned banks.

In addition, a number of rural commercial banks, rural credit cooperatives and other rural credit institutions in Guangxi, Guangdong, Heilongjiang and other regions have also announced in succession that they will lower the listed interest rates for RMB deposits from August 1.

For example, Guangxi Longsheng Rural Commercial Bank issued an announcement stating that the bank will adjust some of its RMB deposit rates starting August 1. Among them, demand deposits will be reduced by 5 basis points to 0.1%, and the interest rates for 6-month, 1-year, and 2-year fixed deposits will be adjusted from 1.75%, 2.15%, and 2.55% to 1.55%, 1.9%, and 2.3%, respectively, down 20, 25, and 25 basis points.

Guangxi Pingle Rural Cooperative Bank will also adjust its RMB deposit interest rates from August 1, with a drop of 70 basis points. The bank's one-year deposit rate will be reduced by 10 basis points to 1.8%, the two-year rate will be reduced by 40 basis points to 1.9%, the three-year rate will be reduced by 70 basis points to 2.1%, and the five-year rate will be reduced by 50 basis points to 2.3%.

The pace of interest rate cuts has clearly accelerated

It is reported that this round of "interest rate cuts" began on July 25 when the six major state-owned banks took the lead in announcing a reduction in the deposit interest rate. After that, in just four days, 18 joint-stock banks followed suit and quickly completed the reduction of the deposit interest rate.

The reporter noticed that in the past "interest rate cut" process, large banks always took the lead, followed by small and medium-sized banks such as joint-stock banks, city commercial banks, and rural commercial banks. However, the adjustment pace of this round of "interest rate cuts" was quite rapid, and it had already reached small and medium-sized banks in just one week.

Regarding the faster pace of bank deposit rate cuts, Zhou Maohua, a researcher at the Macroeconomics Group of the Financial Markets Department of Everbright Bank, pointed out to our reporter that recently, the cycle of deposit rate adjustments by small and medium-sized banks has indeed shortened significantly, which may be related to the relatively large net interest margin pressure of some banks. "In addition, after the previous rounds of banks continuously lowering deposit rates, the market and institutions have gradually adapted to this adjustment model. Therefore, the market may have already fully digested the impact of the new round of deposit rate cuts by banks."

"In just a few days, the six major state-owned banks and joint-stock banks all announced a reduction in deposit interest rates, and some small and medium-sized banks in some regions also quickly followed suit. The pace is indeed quite fast." Postal Savings Bank researcher Lou Feipeng analyzed to reporters that this may be because the current net interest margin of banks is at a low level. After the LPR reduction, the downward pressure on the net interest margin of banks is greater, and the cost decline on the liability side of banks is slower than the decline in the yield on the asset side. Therefore, measures need to be taken quickly to reduce the cost of liabilities.

At the same time, looking ahead to the future, market experts believe that the deposit interest rate may continue to decline this year. Mingming, chief economist of CITIC Securities, pointed out that it is expected that this round of bank "interest rate cuts" will ease the cost and interest margin pressure on the liability side of commercial banks and improve revenue performance, but considering that the deposit interest rate cut is only for new deposits, it is difficult to have an immediate effect, and the overall situation needs further observation. The subsequent deposit interest rate cut is still the general trend, and the possibility of a new round of deposit interest rate cuts in the fourth quarter or early next year cannot be ruled out.

In addition, Wen Bin, chief economist of China Minsheng Bank, said that since 2024, the wealth management market has continued to recover rapidly, with the growth rate in scale far exceeding the same period last year. The current reduction in the deposit listing rate is expected to further drive deposits to move to wealth management.

Editor: Captain

Review: Chen Mo

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