Latest news with #depositrates
CNA
23-05-2025
- Business
- CNA
China lowers deposit rate ceilings to protect bank interest margins, sources say
BEIJING: China has lowered the ceilings on deposit rates, three banking sources with direct knowledge of the guidance said on Friday (May 23), as authorities seek to protect banks' profit margins and discourage savings. The interest rate self-regulatory body under China's central bank has lowered the upper limit of deposit rates banks can offer their clients, the sources said. The move came days after China cut benchmark lending rates and state banks reduced their baseline deposit rates. China's economy is suffering from weak consumption, a prolonged property crisis and a trade war with the United States, putting pressure on banks' profitability. "Banks' interest margins are under heavy pressure," one of the sources said. Every 10 basis-point (bp) cut in deposit rates could reduce overall borrowing costs by roughly 5 bps, the source added. Under the latest guidance, the ceilings for some banks' time deposit rates have been slashed by 30-40 bps, according to the sources. In contrast, China's major banks reduced baseline deposit rates by up to 25 basis points (bps) for some tenors on Tuesday. This reflects regulators' desire to prevent interest margins from shrinking further, as some banks compete heavily to build deposits by promising high returns. Amid the heated competition for deposits, reducing the rate ceilings can give some breathing space for banks already suffering from sliding margins, a source said. Commercial banks' net interest margin - a key profitability measure - dropped to a record low 1.43 per cent in the first quarter of this year, official data showed. The margins are expected to fall a further 10-15 bps this year, analysts at China International Capital Corp predicted.
Reuters
23-05-2025
- Business
- Reuters
China lowers deposit rate ceiling to protect banks' interest margins, sources say
BEIJING/SHANGHAI, May 23 (Reuters) - China has lowered the ceiling of deposit rates, three banking sources with direct knowledge of the guidance said on Friday, as authorities seek to protect banks' profit margins and discourage savings. The interest rate self-regulatory body under China's central bank has lowered the upper limit of deposit rates banks can offer their clients, the sources said. The move came days after China cut benchmark lending rates and state banks reduced their baseline deposit rates.
South China Morning Post
23-05-2025
- Business
- South China Morning Post
‘A bit lost': China's savers search for options after deposit rate cuts
After a landmark decision by China's biggest banks this week to slash one-year deposit rates below 1 per cent for the first time, households across the country are grappling with a pressing question: where should they park their money? Advertisement The dilemma arose for risk-averse savers after six major state-owned lenders and leading joint-stock bank China Merchants Bank (CMB) announced on Monday they would cut their one-year fixed deposit rate to 0.95 per cent, eliminating what was once a safe, if modest, source of passive income. Smaller banks have followed suit, trimming rates across maturities, albeit to a smaller degree. Their one-year rate stands at 1.15 per cent, while three-year rates are at 1.3 per cent. For millions of Chinese families, the decline in deposit yields makes an already challenging financial landscape all the more slippery. Households are wracked with economic uncertainty while facing weak income prospects and a lack of attractive investment options. 'Since the rate cuts, we've seen a surge in clients asking what to do next. Many lament that the days of relying on bank deposits for steady returns are over,' said Liu, a client manager at a Shanghai branch of CMB who requested partial anonymity. Advertisement The move, the seventh such adjustment among China's leading banks since September 2022, officially ushered the country's deposit rates into the sub-1 per cent era.
Bloomberg
20-05-2025
- Business
- Bloomberg
China Banks Trim Deposit Rates Again to Shore Up Profitability
Several major Chinese banks have cut their deposit rates in the latest efforts to reduce funding costs and preserve their shrinking profitability. Industrial & Commercial Bank of China Ltd., China Construction Bank Corp. and China Merchants Bank Co. have trimmed rates across tenors on Tuesday with those on one and two-year fixed deposits falling by 15 basis points, according to updates on their mobile apps. Interest rates on three and five-year deposits were slashed by 25 basis points.
Reuters
19-05-2025
- Business
- Reuters
China's state banks will cut deposit rates on Tuesday, sources say
BEIJING, May 19 (Reuters) - China's major state banks will cut their deposit rates from Tuesday, three people with knowledge of the matter said, easing pressure on profitability as China reduces lending rates to boost a slowing economy. Banks including Industrial and Commercial Bank of China ( opens new tab, China Construction Bank ( opens new tab and Bank of China ( opens new tab will cut rates on some fixed-term deposits, said the sources, who declined to be named as they are not authorised to speak to media. The sources did not detail the scale of the rate cuts. The banks did not immediately reply to requests for comment. Chinese authorities announced a raft of stimulus measures earlier this month, including interest rate cuts and a major liquidity injection, as Beijing steps up efforts to soften the economic fallout from the trade war with the United States. People's Bank of China (PBOC) Governor Pan Gongsheng said a 10 basis point cut to the country's main seven-day reverse repo rate would lead to a reduction in the benchmark loan prime rate (LPR) of the same size. China is due to release its monthly LPR fixing at 0100 GMT. Reducing deposit rates would help banks lower their funding costs at a time when they are under pressure to support economic growth amid a property crisis, weak loan demand and record low interest margins.
