A number of banks will lower their interest rates on deposits tomorrow

Approaching the end of the year, it was supposed to be a period for banks to raise deposit interest rates to "collect savings", but today ushered in the news that banks cut interest rates for the third time this year. On December 21, the Shell financial reporter learned from a number of banks that from tomorrow (December 22), the deposit interest rate will be lowered again, and the upper limit of preferential Save and the interest rate on large certificates of deposit will also be lowered simultaneously, of which the three-year and five-year time deposit interest rates will be lowered by 25 basis points.

On the same day, ICBC pointed out in the "Explanation on the Adjustment of RMB Savings Deposit Interest Rates" that the adjustment is to further play the role of the market-oriented adjustment mechanism of deposit interest rates, continue to release the reform and transmission effect of the loan market prime interest rate, and improve the sustainability of serving the real economy.

A number of bank analysts told the Shell financial reporter that the deposit rate has a driving factor for continued adjustment. At present, commercial banks control deposit interest rates in a variety of ways to reduce the cost of liabilities, and it is expected that the decline in bank deposit interest rates will still be the general trend.

Deposit rates will be cut by another three-year and five-year fixed deposits by another 25 basis points

According to the statement issued by the Industrial and Commercial Bank of China, the adjustment of the listed interest rate mainly involves the newly opened (or withdrawn) notice deposits, lump sum deposits, lump sum deposits, deposit and interest and other deposit varieties, 3-month, 6-month, one-year, two-year, three-year, five-year time deposits and large-amount certificates of deposit from December 22.

The listed interest rate of ICBC's call deposit was lowered by 0.2 percentage points, and the listed interest rate of lump sum deposit, lump sum deposit and interest was lowered by 0.1 percentage point. The listed interest rates for three-month, six-month and one-year time deposits were lowered by 0.1 percentage points, the listed interest rates for two-year time deposits were reduced by 0.2 percentage points, and the listed interest rates for three-year and five-year time deposits were lowered by 0.25 percentage points.

The note also shows that in addition to adjusting the listed interest rate of deposits, the prime interest rate level of call deposits and time deposits (including large-value certificates of deposit) has also been optimized to reflect the changes in the market interest rate situation.

Another person from a large state-owned bank told the Shell Finance reporter that the bank will also reduce the upper limit of the deposit listing interest rate and preferential interest rate from December 22. Among them, the upper limit of the listed interest rate and preferential interest rate for new general time deposits with a tenor of one year or less will be reduced by 10 basis points, the upper limit of the two-year listed interest rate and the preferential interest rate will be reduced by 20 basis points, and the upper limit of the three-year and five-year listed interest rate and preferential interest rate will be reduced by 25 basis points.

"Banks will also cut the maximum interest rate on large certificates of deposit. The above-mentioned large state-owned bank pointed out that from December 22 (inclusive), the maximum interest rate of large-denomination certificates of deposit with a maturity of one year or less will be reduced by 10 basis points, the maximum interest rate of two-year large-denomination certificates of deposit will be reduced by 25 basis points, and the maximum interest rate of large-denomination certificates of deposit with three-year and five-year maturities will be reduced by 30 basis points.

In addition, another person from a joint-stock bank told the Shell financial reporter that the bank will also further reduce the deposit interest rate. Among them, the interest rate of deposit products with relatively high interest rates will be lowered next Monday (December 25), of which the interest rate on 3-year time deposits will be reduced from 2.85% to 2.6%.

Some people in the industry expect that in this adjustment, the large state-owned banks will take the lead in the adjustment, and the joint-stock banks will follow the adjustment, and will eventually guide other banks to follow up and reduce the adjustment.

The deposit interest rate was lowered three times during the year, and the fixed deposit of 100,000 yuan earned nearly 2,000 yuan less in 3 years

This time, major banks cut interest rates again, which is the third time this year that they have lowered their deposit rates. Taking the state-owned banks as an example, the listed interest rate of three-year time deposits has been lowered by 65 basis points in three times. According to this calculation, the interest on a 3-year fixed deposit of 100,000 yuan is 1,950 yuan less than that of one year ago. If calculated for the first time since September last year, the listed interest rate of the 3-year time deposit of the major state-owned banks has been reduced by 80 basis points, that is, the interest on the 3-year time deposit of 100,000 yuan is 2,400 yuan less than before September last year.

In fact, the current round of bank deposit rate cuts began in April 2022 when the central bank's self-discipline mechanism for guiding interest rates established a market-oriented adjustment mechanism for deposit interest rates, which is intended to guide banks to reasonably adjust deposit interest rates with reference to changes in market interest rates. Subsequently, the interest rates on large certificates of deposit and time deposit products of many banks have been lowered.

In September 2022, a major state-owned bank lowered the listed deposit interest rate for the first time, officially opening the prelude to a general decline in deposit interest rates, and then a number of joint-stock banks followed up with adjustments. In May this year, the upper limit of the interest rate on the bank's agreed deposits and call deposits was lowered; in June this year, the state-owned banks and joint-stock banks successively lowered the interest rates on their deposits, and then the interest rates on the fixed deposit products of the state-owned banks and some joint-stock banks fell to below 3 percent.

In September this year, state-owned banks and joint-stock banks lowered the listed interest rates of fixed deposits, and then it was difficult to find 3-year time deposit products of more than 3% in joint-stock banks.

"Deposit rates are driven by continuous adjustments. Ming Ming, chief economist of CITIC Securities, also said that in the context of financial support entities, loan interest rates have fallen significantly, but the cost of bank liabilities has remained relatively rigid, and interest margins have continued to compress, increasing operating pressure. Considering that the reduction of the interest rate of existing mortgage loans will further depress the profit margins of banks, it is difficult for the current adjustment of deposit interest rates to fully offset the impact of the adjustment of loan interest rates, and it may be necessary to continue to reduce deposit interest rates in the future.

Ming Ming said that the trend of fixed-term deposits is becoming more and more obvious, and the pricing of long-term deposits and some special deposit products is on the high side. In addition, commercial banks have strengthened their active liability management capabilities, and it is expected that deposit interest rates will also be adjusted in line with the downward trend of interest rates on financial bonds and interbank certificates of deposit under the process of marketization.

To make room for the decline in the financing cost of the real economy, the deposit interest rate may continue to be adjusted

Looking forward to 2024, under the requirements of the Central Economic Work Conference to "promote the steady and moderate decline of comprehensive social financing costs", the market generally believes that deposit interest rates may continue to be lowered to make room for the decline in the cost of the real economy.

Wang Yifeng, chief analyst of the financial industry at Everbright Securities, believes that it is estimated that the LPR loan interest rate will be lowered once in 2024. This means that in 2024, great efforts will be needed to reduce the comprehensive cost of liabilities in the banking system, and the reduction of the listed interest rate of deposits, the adjustment of the upper limit of the MPA interest rate, or the optimization of interest rate pricing for specific products are all policy options.

Dong Ximiao, chief researcher of Zhaolian Financial, also pointed out that in the long run, in the economic downturn, the price of various assets will fall, investment income will decline, and deposit interest rates will fall. In the future, banks may still reduce costs on the capital side, and it is more likely that deposit rates will continue to fall. The decline in deposit interest rates will reduce the interest on deposits of enterprises and residents, or to a certain extent, it will encourage enterprises and residents to expand investment and consumption, which will help boost consumption and expand domestic demand.

"In the face of the current complex business environment, reducing the cost of bank deposits is still a key direction. "Ming Ming believes that because residents' risk appetite is still low in the short term, even if the deposit rate is lowered, it is expected that the scale of deposits will still maintain an upward trend. However, from a medium- to long-term perspective, the phenomenon of "deposit moving" may be strengthened, and low-risk asset management products such as bank wealth management are expected to usher in incremental funds.

In addition, Dong Ximiao also pointed out that the current effective financing needs of enterprises and residents are insufficient, confidence and expectations are weak, and risk appetite is low. To speed up the implementation of the deployment of the Central Economic Work Conference, fiscal policy and monetary policy should be more proactive, take the initiative to continue to help business entities to solve difficulties and the steady recovery of the real economy, stabilize residents' employment, increase residents' income, and fundamentally boost the willingness and ability of enterprises and residents to invest and consume.

Beijing News Shell Financial Reporter Jiang Fan

Edited by Chen Li

Proofread by Lucy