With the decline in lending rates and the narrowing of banks' net interest margins, many banks have recently announced that they will reduce deposit interest rates, and high-interest deposit products are gradually decreasing, indicating that a new round of deposit rate cuts may be coming.
Since April, a number of small and medium-sized banks, such as Bank of Guilin, Bank of Wenzhou, and Tongde Rural Commercial Bank, have announced cuts in deposit rates. This trend shows that banks are gradually cutting back on high-interest deposit products.
According to a financial manager of the Bank of Jiangsu, the current fixed deposit interest rate has been reduced. For example, the interest rate on a 5-year term deposit has fallen from 2.40% at the end of last year to 2.10% now, and the interest rate on a 3-year term deposit has also been reduced. In addition, the interest rate of the "Ruyi Deposit" product launched by some banks has also been reduced.
In addition to small and medium-sized banks, some large banks are also adjusting deposit rates. On May 8, the Bank of Guilin announced that it would adjust the annual interest rate of the 5-year lump sum deposit for individuals, cutting it by 40 basis points.
Industry insiders generally believe that with the decline in loan interest rates and the continuous narrowing of banks' net interest margins, a new round of deposit interest rate cuts is coming.
According to the management of Bank of China, they will continue to increase the pressure on high-cost deposits, including agreement deposits, structured deposits and large-denomination certificates of deposit with a maturity of more than 3 years. This suggests that banks are actively responding to the challenge of declining net interest margins.
At the same time, the market generally expects that there is room for further reductions in deposit rates. Especially after the Politburo meeting once again mentioned the interest rate and reserve ratio policies, the market has certain expectations for interest rate cuts and RRR cuts.
According to analysts' forecasts, in the first half of 2024, large state-owned banks and joint-stock banks may usher in the first round of deposit "interest rate cuts" this year, and the reduction is expected to be between 10 basis points and 15 basis points.
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