Many banks collectively announced： cut interest rates!

A number of banks have "cut interest rates"!

Recently, small and medium-sized banks from Henan, Shaanxi, Shanxi, Yunnan and other places have intensively issued announcements, announcing the reduction of the execution interest rate of time deposits. According to incomplete statistics, the deposit interest rate is lowered from 5 basis points to 45 basis points.

Many banks cut deposit interest rates.

According to the China Fund, in early April, a number of small and medium-sized banks in Henan, Shaanxi, Shanxi, Yunnan, Guizhou, Guangdong and other places issued the "Announcement on Adjusting the Executive Interest Rate of Time Deposits" through official channels, announcing that they would lower the interest rate of time deposits, including lump-sum deposit and withdrawal interest rates for three months, six months, one year, two years and three years.

In this interest rate cut,There are a large number of banks under the jurisdiction of Henan, and dozens of rural commercial banks and rural banks have announced the reduction of time deposit interest rates.

Specifically, 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 time deposits.

Since March 31st, Biyang Rural Commercial Bank has lowered the three-month, six-month, one-year and two-year fixed deposit rates 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 three-year and five-year fixed deposit rates remain unchanged at 2.35% and 2.40% respectively.

Since April 1st, Xinmi Rural Commercial Bank has adjusted the two-year deposit interest rate from 2.4% to 2%, dropping by 40 basis points. The bank’s one-year deposit interest rate was lowered by 35 basis points simultaneously, and it was adjusted to 1.8%. The six-month and three-month deposit rates were lowered from 1.8% and 1.6% to 1.65% and 1.4%, respectively, by 15 and 20 basis points.

Before April 1, the one-year deposit interest rate of Xiuwu Rural Commercial Bank was as high as 2.25%, which was significantly reduced by 45 basis points to 1.8%. The two-year interest rate has also been lowered by a relatively large margin, by 35 basis points to 2%.

Hebi Rural Commercial Bank previously set multi-grade annualized interest rates for deposits of the same term according to different deposit amount ranges. On April 1st, the bank announced that it would adjust the fixed deposit rate. According to the adjusted interest rate setting, this "grading" is cancelled, and the deposit interest rate of the same term remains the same, and all of them are implemented according to the previous minimum amount range.

A similar situation also appeared in Qixian Rural Credit Cooperative Association, which no longer implemented different annual interest rates for lump-sum time deposits according to the amount.

In addition, Shaanxi Zhashui Rural Commercial Bank, Daixian Hongdu Village Bank, Yunnan Shiping Beiyin Village Bank, Dejiang Changzheng Village Bank, Bo ‘ai Rural Commercial Bank, Guangdong Puning Huicheng Village Bank, Zhoukou Rural Commercial Bank and many other small and medium-sized banks have recently announced that they will cut their deposit interest rates from the end of March or early April.

However, the interest rate adjustment range of each bank is not consistent with the adjusted interest rate. Even though the reduction has been made, the implementation interest rate of some village banks’ five-year time deposits is as high as 3%, the three-year time deposit is 2.95%, and the two-year and one-year time deposits can be as high as 2.4% and 2.1% respectively.

According to china securities journal, some experts said,The adjustment of deposit interest rate often takes the form of "state-owned banks take the lead, joint-stock banks follow quickly, and other banks follow in an orderly manner". The interest rate adjustment of small and medium-sized banks is still the follow-up of the bank’s "interest rate cut tide" at the end of last year.

The phenomenon of "upside down" of deposits has been eliminated

Last year, state-owned banks updated the interest rate of RMB deposits three times. By the end of the year, there were few deposit products with annualized interest rate above 3%. Especially after the third adjustment in the year on December 22, the three-year fixed deposit and listing interest rate of state-owned big banks broke through the integer mark of 2% and fell to 1.95%.

It is worth noting that while commercial banks lowered the deposit interest rate, some small and medium-sized banks seized the time window lowered by their peers to absorb deposits with high interest rates against the trend, which led to many phenomena of "partial upside down" of medium and long-term deposit interest rates.

Under normal circumstances, bank deposits follow the rule of "the longer the term, the higher the interest rate". However, in the first quarter of this year, many banks adjusted the interest rates of some term products, resulting in the phenomenon that the 5-year interest rate of time deposits was the same as the 3-year interest rate, even lower than the 3-year deposit rate, especially among many small and medium-sized banks.

After this interest rate adjustment, the upside-down phenomenon of deposit interest rates in some banks has been eliminated, especially the situation that the annualized interest rate of medium-term deposit products is higher than that of long-term deposit products may be alleviated.

Taking the behavior of 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% to 1.40%, 1.65% and 1.80% at the highest.

Before the adjustment, the bank’s three-year fixed deposit rate was 25 basis points higher than the five-year fixed deposit rate, while the adjusted five-year fixed deposit rate was 5 basis points higher than the three-year fixed deposit rate.

This is not a case. Taiqian Rural Commercial Bank also adjusted the 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, which were 2.70% and 2.60% respectively. After adjustment, the three-year fixed deposit rate is 5 basis points lower than the five-year fixed deposit rate, which are 2.35% and 2.40% respectively.

According to china securities journal, Lou Feipeng, a researcher at the Postal Savings Bank, said that recently, the interest rates of deposits with different maturities and local deposits and loans have been inverted in China. This is a market behavior taken by different banks according to their own conditions under the background of interest rate marketization, but the inversion itself is abnormal and difficult to last for a long time. Eliminating the inversion by adjusting the interest rates of deposits with different maturities will help to better stabilize bank operations and better serve the development of the real economy.

The deposit interest rate may continue to be lowered.

What is the trend of bank deposit interest rate? Will it be further lowered?Many institutions and market participants generally believe that there is still room for lowering the deposit interest rate.

According to China Fund News, recently, the relevant person in charge of the central bank said that banks should be guided to lower the deposit interest rate by deepening the interest rate marketization reform. At the same time, there is still room for adjustment of monetary policies such as deposit reserve. The reduction of the statutory deposit reserve ratio means that more funds can be freely circulated, and more liquidity means that the deposit and loan interest rates and the yields of various wealth management products are expected to further decline.

There is a view that,In the second and third quarters of this year, the market is likely to usher in a new round of adjustment of deposit interest rates again.According to the research report of CITIC Securities, from the perspective of the time law of deposit interest rate reduction, the time interval of deposit listing interest rate adjustment varies from 3 to 9 months, but there is a clear trend of shortening the time interval in the past year.

Citic Securities judged that considering the adjustment in April 2022 and 2023, the possibility of lowering the deposit interest rate in April this year was not even ruled out. Formally, in addition to the demonstration role of big banks, it may also be to control the issuance scale or pricing level of some special deposit products and reduce the space for banks to "save at high interest rates".

According to china securities journal, Zhou Maohua, an analyst in the financial market department of China Everbright Bank, said that there is still the possibility of a new round of downward adjustment. The main reason is that there is still a certain imbalance in the deposit market, the cost of bank debt is rising, and the pressure of net interest margin is still high. Banks need to expand space for the real economy to make profits.

• What will be the impact of lowering the deposit interest rate?

Source: 21st century business herald, Public Information, china securities journal, China Fund.