A few days ago, a number of banks "cut interest rates".
Small and medium-sized banks from Henan, Shaanxi, Shanxi, Yunnan and other places have issued announcements intensively, announcing the reduction of the execution interest rate of time deposits. According to incomplete statistics, the reduction in deposit rates ranged from 5 basis points to 45 basis points.
According to the Shanghai Securities News, market participants believe that large, medium and small banks usually adopt "echelon" cuts in deposit interest rates, and the reduction of deposit interest rates by regional banks in many places is still a continuation of the third round of deposit interest rate cuts by commercial banks last year. Under the pressure of further compression of bank deposit and loan spreads, national banks may start a new round of deposit "interest rate cuts" in the first half of the year.
A number of small and medium-sized banks have announced interest rate cuts
"Since April 1, the interest rates of our bank's three-month, six-month, one-year and two-year fixed deposits have been reduced from 1.60%, 1.80%, 2.15% and 2.40% to 1.40%, 1.65%, 1.80% and 2.00% respectively. The staff of Xinmi Rural Commercial Bank said.
Since March 31, Miyang Rural Commercial Bank has lowered the interest rates on three-month, six-month, one-year and two-year fixed deposits from 1.50%, 1.70%, 2.10% and 2.35% by up to 35 basis points to 1.40%, 1.65%, 1.80% and 2.00%. The interest rates on three-year and five-year fixed deposits remained unchanged at 2.35% and 2.40% respectively.
Starting from March 31, 2024, Zhumadian Rural Commercial Bank will adjust the annual interest rate of three-month, six-month, one-year, two-year, three-year and five-year lump sum deposit and withdrawal time deposits. Judging from the adjustment information, the five-year deposit rate remained unchanged at 2.4%, and the deposit interest rates of the remaining maturities were reduced, ranging from 15 basis points to 35 basis points.
In addition, a number of small and medium-sized banks, such as Runan Rural Commercial Bank, Xiuwu Rural Commercial Bank, Xingning Zhujiang Village Bank, Dejiang Changzheng Village Bank, Yunnan Shiping Beiyin Village Bank, Puyang Zhongyuan Village Bank, Tanghe County Rural Credit Cooperative, etc., have lowered their fixed deposit interest rates from March 31 or April 1.
There is still room for deposit rates to be lowered
According to the China Securities Journal, some experts said that the adjustment of deposit interest rates often presents a model of "large state-owned banks taking the lead, joint-stock banks following quickly, and the rest of the banks following in an orderly manner". The interest rate adjustment of small and medium-sized banks is still a follow-up to the "wave of interest rate cuts" of banks at the end of last year. In addition, against the backdrop of intensifying the trend of fixed-term deposits and continued pressure on banks' net interest margins, the market may once again usher in a new round of adjustment of deposit interest rates.
Last year, major state-owned banks updated their interest rates on renminbi deposits three times. By the end of the year, there were very few deposit products with an annualized interest rate of more than 3%. In particular, after the third adjustment of the year on December 22, the three-year fixed deposit interest rate of large state-owned banks broke through the 2% integer mark and fell to 1.95%.
It is worth noting that while commercial banks are lowering deposit interest rates, some small and medium-sized banks are seizing the time window of their peers to reduce their deposit rates at high interest rates against the trend, which has led to the phenomenon of "partial inversion" of many medium and long-term deposit interest rates.
At present, some banks have made the three-year fixed deposit interest rate no longer higher than the five-year fixed deposit interest rate through this adjustment.
Taking Henan Suiping Rural Commercial Bank as an example, since March 31, the bank has lowered the three-month, six-month, one-year, two-year, and three-year fixed deposit interest rates from 1.60%, 1.80%, 2.10%, 2.35%, and 2.65% by up to 35 basis points to 1.40%, 1.65%, 1.80%, 2.00%, and 2.35%, and the five-year fixed deposit interest rate remains unchanged at 2.40%.
Before the adjustment, the bank's three-year fixed deposit rate was 25 basis points higher than the five-year fixed deposit rate, and after the adjustment, the five-year fixed deposit rate was 5 basis points higher than the three-year fixed deposit rate.
This is not an isolated case, and the former Rural Commercial Bank of Taiwan has also adjusted the fixed deposit interest rate from April 3. Before the adjustment, the bank's three-year fixed deposit rate was 10 basis points higher than the five-year fixed deposit rate, at 2.70% and 2.60%, respectively. After the adjustment, the three-year time deposit rate is 5 basis points lower than the five-year time deposit rate, at 2.35% and 2.40% respectively.
What is the trend of bank deposit interest rates? Will they be further lowered? Many institutions and market participants generally believe that there is still room for deposit interest rates to be lowered.
Recently, the relevant person in charge of the central bank said that it is necessary to guide banks to lower deposit interest rates by deepening the market-oriented reform of interest rates, and at the same time, there is still room for adjustment of monetary policies such as deposit reserves. The reduction of the statutory reserve ratio means that there are more funds that can be freely circulated, and more liquidity means that the interest rates on deposits and loans and the yields of various wealth management products are expected to fall further.
CITIC Securities judged that considering that there will be adjustments in April 2022 and 2023, it does not even rule out the possibility of reducing the deposit rate in April this year. In addition to the exemplary role played by the big banks in further lowering the interest rates on deposits, it may also be to control the issuance scale or pricing level of some special deposit products, so as to reduce the space for banks to "attract deposits at high interest rates".
As for the reasons for the reduction of deposit interest rates, on the one hand, the market interest rate level has fallen as a whole due to the impact of macroeconomic recovery, monetary policy regulation and control, and other factors. On the other hand, the growth rate of social financing demand has slowed down significantly, especially under the influence of factors such as the replacement of residents' stock housing loans, the structure of bank assets has changed.
According to China Fund News, an analyst pointed out that "the answer may lie in the further compression of deposit and loan spreads." Originally, this gap was the 'gold mine' on which banks depended, but now it seems to be quietly being tightened. "Therefore, the main purpose of the bank's deposit rate reduction is to alleviate the pressure of narrowing net interest margins, stabilize the income level, and continue to reduce the financing cost of the real economy.
Source: National Business Daily, Shanghai Securities News, China Securities Journal, China Fund News