Chinese banks are expected to cut interest rates on about 300 trillion yuan worth of deposits as early as this week, Bloomberg News reported, according to a source familiar with the situation.
Major financial institutions such as Industrial and Commercial Bank of China and China Construction Bank are expected to lower interest rates on some deposit products in accordance with the guidance set by the People’s Bank of China’s interest rate self-discipline mechanism.
The expected reductions include at least 20 basis points for one-year term deposits and at least 25 basis points for long-term deposits.
The move is in line with an earlier statement by People’s Bank of China Governor Pan Gongsheng, who said he plans to cut deposit rates by another 20 to 25 basis points in September. If these rate cuts go ahead, it would be the second major rate cut this year, following a similar measure taken in July.
The strategy is aimed at easing profitability pressures faced by banks in light of lower mortgage rates and benchmark lending rates, part of China’s broader efforts to boost the economy amid deflation concerns. There is.
The ongoing economic slowdown and woes within the real estate sector continue to plague Chinese lenders, which are characterized by slowing loan demand and rising non-performing loans.
