(Yicai) October 18 — China’s six major state-owned financial institutions have lowered deposit interest rates for the second time since the end of July and the sixth time since September 2022.
Agricultural Bank of China, Bank of China, Bank of Communications, China Construction Bank, Industrial and Commercial Bank of China, and China Postal Savings Bank today reduced deposit interest rates for different maturities by 25 basis points. 3-month, 6-month, 1-year, and 2-year interest rates have been reduced to 0.8%, 1%, 1.1%, and 1.2%, respectively, and 3-year and 5-year interest rates have been reduced to 1.5%. Ta. and 1.55 percent.
The previous deposit rate cuts by six financial institutions took effect on July 25, cutting interest rates by 10 to 20 basis points.
The latest reduction in deposit rates was not unexpected. People’s Bank of China Governor Pan Gongsheng said on September 24 that banks are expected to further cut deposit rates by 20 to 50 basis points in response to the large-scale policy stimulus announced that day.
The policies introduced that day include lowering the seven-day reverse repo rate by 20 basis points to 1.5% in order to lower comprehensive financing costs, as well as lowering existing home loan interest rates.
China’s banking industry needs to lower deposit rates to lower the cost of funds, as a rapid decline in lending rates has pushed net spreads to record lows. Other financial institutions are expected to follow the state-run financial institution’s lead soon.
BOC-affiliated research institutions are likely to see some residents start shifting their savings to smaller banks with higher nominal deposit interest rates, and more savings could eventually flow into riskier asset management markets. I predict that there will be.
Editor: Tang Shihua, Futura Costaglione
