Many banks' deposit rates have fallen, and more banks will follow suit from next week

On December 22, the dust settled on a new round of bank deposit rate cuts. Early in the morning of the same day, ICBC, China Construction Bank, Agricultural Bank of China, Bank of China, Bank of Communications, China Merchants Bank and many other banks updated the listed interest rates of RMB deposits on their official websites. The Industrial and Commercial Bank of China (ICBC) and the Agricultural Bank of China (ABC) have also simultaneously lowered the deposit interest rates for large-amount certificates of deposit and special deposits, with a maximum reduction of 30 basis points.

The day before, the Shell financial reporter learned from people familiar with the matter that the bank will cut the listed interest rate of the deposit interest rate, the upper limit of the deposit preferential interest rate and the interest rate of large certificates of deposit on the 22nd. The current downward adjustment is consistent with the previous day's news.

A number of industry insiders told financial reporters that the deposit interest rate was lowered again at the end of the year, which will help ease the pressure on net interest margins and expand space for banks to further benefit the real economy. Combined with the experience of previous reductions, it is expected that large, medium and small banks will follow up and reduce deposit interest rates in order to ensure a stable and orderly deposit market. The further decline in bank deposit rates may promote the recovery of bank wealth management scale.

The interest rates on various types of deposits of state-owned banks have been lowered

The third deposit rate adjustment of the year has been implemented. Shell financial reporters learned that at present, the Industrial and Commercial Bank of China, the Construction Bank, the Agricultural Bank of China, the Bank of China, the Bank of Communications, and the China Merchants Bank have all lowered the interest rates on deposits.

According to the latest RMB deposit interest rate table of various banks, the current three-year time deposit interest rate is 1.95%, down 25 basis points from the previous one, entering the "1 era", and the five-year time deposit interest rate is 2%, down 25 basis points. In addition, the interest rate for one-year time deposits was reduced by 10 basis points to 1.45 per cent, and the interest rate for two-year time deposits was reduced by 20 basis points to 1.65 per cent.

As the "benchmark interest rate", the adjustment of the listed interest rate of bank deposits also means that the interest rate of bank deposit products such as large-denomination certificates of deposit and special deposit products will also be lowered. Shell financial reporters learned from a number of state-owned banks that the current banks have also lowered the interest rates of these deposit products.

Taking the Agricultural Bank as an example, the bank lowered the upper limit of the prime interest rate for one year and less (including silver interest) by 10 basis points, the upper limit of the two-year listing rate and the prime interest rate by 20 basis points, and the upper limit of the three-year and five-year listing rate and preferential interest rate by 25 basis points. The bank also lowered the maximum interest rate on large certificates of deposit. Among them, the interest rate on three-year certificates of deposit has been reduced by 30 basis points to 2.35%, the interest rate on two-year certificates of deposit has been reduced by 25 basis points to 1.90%, and the interest rate on one-year certificates of deposit has been reduced by 10 basis points to 1.8%. In addition, the interest rates on 1-month, 3-month and 6-month certificates of deposit were all lowered by 10 basis points to 1.5%, 1.5% and 1.7% respectively.

In addition, the Shell Finance reporter saw on the ICBC App that the bank also lowered the interest rate on large-amount certificates of deposit and the interest rate on special products, which was consistent with the Agricultural Bank of China. Another person from CCB said that the bank's interest rate on three-year large-denomination certificates of deposit has been cut by 30 basis points.

Joint-stock banks said they would follow suit next week

According to the Shell financial reporter, the current deposit interest rate reduction is mainly state-owned banks, but joint-stock banks have generally not adjusted the listed interest rate or deposit product interest rate. Among them, although China Merchants Bank has lowered the listed interest rate, as of the press release of the Shell Finance reporter, the interest rate of the bank's characteristic deposit products and large-amount certificate of deposit products has not declined.

However, according to past practice, after the state-owned banks lowered the interest rate, the impact of the deposit interest rate cut will be passed on to joint-stock banks, urban commercial banks, and rural commercial banks in turn. Therefore, many industry insiders expect that more banks will follow suit in the future to cut deposit rates.

According to the Shell financial reporter, a number of joint-stock banks plan to adjust various deposit interest rates next Monday.

"This adjustment is bigger than the previous ones. A joint-stock bank insider told the Shell financial reporter that the interest rate of the bank's three-year time deposit product will be reduced from the previous 2.85% to 2.6%. Since the beginning of this year, the bank's three-year fixed deposit rate has fallen by nearly 10%.

Another person from a joint-stock bank said that it has not yet received a specific notice of a reduction in the deposit interest rate. However, the current downward trend of bank deposit interest rates is the general trend, and it is expected that the possibility of further downward adjustment is relatively large.

In fact, since the beginning of December, the deposit interest rates of major banks have generally been stable and falling, and the interest rates of many banks have fallen instead of rising. For example, the fixed deposit of the Bank of Jiangsu in Beijing has been lowered since December 8. Among them, the interest rate on a 3-year fixed deposit with a minimum deposit of 50,000 yuan has been reduced from 2.90% to 2.80%.

"There is no incentive for banks to raise deposit rates right now. An insider of a private bank in the eastern region told the Shell financial reporter that the current bank loan interest rate has been at a low level, and in the context of effective demand still needs to be improved, absorbing high-interest deposits is of little significance to the development of the bank, but will drag down the profitability. As for whether the bank will adjust the deposit rate in the future, the person said that it is still in the wait-and-see stage.

The decline in deposit interest rates may promote the growth of wealth management scale

Regarding the reduction of deposit interest rates, Zhou Maohua, a macro researcher at the financial market department of Everbright Bank, told the Shell Financial Reporter that some banks have made full use of the market-oriented adjustment mechanism of deposit interest rates to alleviate the pressure on net interest margins and expand space for banks to further benefit the real economy.

"Judging from the trend, from the current market interest rate, the income of wealth management products and the interest rate of 10-year treasury bonds, there is still some room for adjustment of bank deposit interest rates. Zhou Maohua said that the subsequent reduction of bank deposit interest rates depends more on the supply and demand of the deposit market, the assets and liabilities of various types and banks, the pressure on net interest margins and operations.

Liang Fengjie, an analyst at Zheshang Securities, also pointed out that the main reason for the interest rate cut is that the bank interest rate spread continues to be under pressure, which is not conducive to the sustainable service of the real economy by banks. Since the fourth quarter, the interest rate cut of existing mortgages has been promoted, and the effect of the LPR interest rate cut in early 2024 will be reflected, which will cause the interest rate spread of listed banks to continue to decline by 12 basis points from the low level in the third quarter of 2023. At the same time, to resolve local debt risks, under the principle of capital preservation and small profits, bank interest margins will continue to be under pressure.

In fact, since the beginning of this year, the continuous decline in deposit rates has also slowed down the growth of banks' deposit customers. A bank account manager told the Shell financial reporter that although the overall scale of deposits has grown well from the perspective of the whole year, since the deposit interest rate has dropped to below 3%, the number of customers who inquire and actually deposit has decreased significantly, while the number of customers who have purchased change wealth management and stable bank wealth management products has increased.

Looking forward to 2024, Ming Ming, chief economist of CITIC Securities, believes that 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.

Liao Zhiming, chief analyst of the banking industry at CMB Securities, also expects that due to the reduction of deposit interest rates and keeping them low, the scale of wealth management is expected to maintain steady growth, with a high point or more than 30 trillion yuan.

Beijing News Shell Financial Reporter Jiang Fan

Edited by Chen Li

Proofread by Zhao Lin