◎ Reporter Zhang Jones Chang Peiqi
A new round of deposit "interest rate cut" opened. On May 20th, major banks such as Industrial and Commercial Bank of China, Agricultural Bank, Bank of China, China Construction Bank, Bank of Communications, Postal Savings Bank, China Merchants Bank and China Everbright Bank announced that they would lower their deposit interest rates.
Take China Construction Bank as an example. In terms of demand deposits, the interest rate is lowered by 5 basis points to 0.05%. In terms of time deposits, the interest rates of lump-sum deposit and withdrawal for three months, six months, one year and two years were all lowered by 15 basis points, to 0.65%, 0.85%, 0.95% and 1.05% respectively; The 3-year and 5-year interest rates were lowered by 25 basis points to 1.25% and 1.3% respectively.
In the opinion of analysts, this round of deposit interest rate reduction is large, which will play multiple roles. Ceng Gang, chief expert and director of the Shanghai Finance and Development Laboratory, said that for banks, lowering the deposit interest rate can reduce the cost of capital and increase the net interest margin, thereby enhancing profitability and capital accumulation capacity and providing space for subsequent expansion of credit supply; For the real economy, the decline in deposit interest rate will be further transmitted to the loan interest rate, which will help reduce the financing costs of enterprises and residents and help stabilize growth; The flow of funds to entities and capital markets will help to better support innovation, entrepreneurship and industrial upgrading.
This round of deposit "interest rate cut" will reduce the cost of bank debt. Wen Bin, chief economist of China Minsheng Bank, said that this is the seventh round of deposit listing interest rate reduction led by state-owned banks and stock banks. The reduction of deposit interest rate is greater than the decrease of loan market quoted interest rate (LPR) on the same day, which helps to reduce the debt cost of banks.
"The decline in the loan interest rate will further increase the downward pressure on the bank’s net interest margin and reduce the debt cost. Deposits are an important source of liabilities for banks, so it is necessary to lower the deposit interest rate to stabilize the bank’s net interest margin and improve the sustainability of banks’ services to the real economy. " Lou Feipeng, a researcher at the Postal Savings Bank, said.
As an important indicator to measure the profitability of banks, the net interest margin has continued to decline in recent years. According to the data of the General Administration of Financial Supervision, in the first quarter of 2025, the net interest margin of commercial banks was 1.43%, which was 0.09 percentage points lower than that in the fourth quarter of 2024, hitting a new low.
Wang Qing, chief macro analyst of Oriental Jincheng, said that after the major banks cut the deposit interest rate and led other banks to follow up the adjustment, the overall deposit interest rate will be lowered by 0.11 to 0.13 percentage points, which can basically cover the impact of the LPR reduction on the bank’s asset-side income, thus stabilizing the bank’s net interest margin.
"This LPR reduction and deposit interest rate reduction, the reduction of debt cost is higher than the reduction of return on assets, which is rare. This is also the largest reduction in deposit interest rates in recent years. On the whole, the impact on banks is positive. " Lin Yingqi, deputy general manager of the research department of CICC and banking analyst, said.
The reduction of deposit interest rate will also have an impact on residents’ assets. Dong Ximiao, chief researcher of Zhaolian, said that with the lower deposit interest rate and the improvement of residents’ expectations, the attractiveness of the capital market and wealth management market will be further enhanced, which will help promote the healthy and sustainable development of the capital market and wealth management market. If investors want to pursue steady income, they can appropriately allocate cash management wealth management products, money funds, national debt and so on.
Talking about the follow-up rhythm of deposit "interest rate reduction", Ceng Gang said that under normal circumstances, large state-owned banks often take the lead in adjusting deposit interest rates because of their stable debts and strong customer base, setting an "anchor" for the market and leading the adjustment of the industry. Subsequently, small and medium-sized banks followed suit to maintain interest margins and refer to market competition.