Heavy! A number of banks officially announced: downgrade!

On October 14, Jingyu Qianfeng Village Bank, Suiping Zhongyuan Village Bank, Hailun Huifeng Village Bank, Qionghai Xingfu Village Bank and other village and township banks issued announcements on adjusting deposit interest rates.

According to the reporter's incomplete combing, since October, small and medium-sized banks in Shanxi, Hainan, Xinjiang, Jilin, Shanxi, Henan, Yunnan, Heilongjiang and other provinces have issued the latest listed interest rates on RMB deposits, and some deposit interest rates have been lowered.

In summary, there are three characteristics of the above adjustments: first, the one-year personal deposit interest rate breaks "2"; Second, the long-term deposit interest rate was further lowered to around 2.25%, and even the three-year and five-year deposit interest rates were "inverted" to further compress the high deposit cost; Third, the reduction is relatively large, and the long-term deposit interest rates of some banks have fallen by 100 basis points.

This is another intensive follow-up action by small and medium-sized banks after the large state-owned banks and joint-stock banks collectively lowered deposit interest rates since July this year, continuing the previous rhythm of "large banks adjusting first, small and medium-sized banks following up", and it is also the tail tide of the fifth round of deposit listing price reduction since 2022.

Follow-up deposit interest rate cuts several times a year

On October 14, the Jingyu Qianfeng Village Bank in Jilin Province issued an announcement on adjusting the deposit interest rate, lowering the interest rate on two-year, three-year, and five-year fixed deposits by 20 basis points. Among them, the interest rate of two-year time deposit was lowered from 2.45% to 2.25%; Both the three-year and five-year savings terms were revised down to 2.6 per cent from 2.8 per cent previously.

It is worth noting that many banks have adjusted deposit interest rates many times this year, for example, the above adjustment is the fourth deposit interest rate cut announcement issued by Jingyu Qianfeng Village and Township Bank this year.

The bank's three-year and five-year deposit products maintained annual interest rates of more than 3% until February this year. In February this year, the bank first lowered the three-year deposit rate from 3.4% to 3.15%, and in June announced that it would cut the two-year deposit rate from 2.75% to 2.7%.

Immediately afterwards, Jingyu Qianfeng Village and Township Bank issued another announcement in July, and the deposit interest rates of various maturities were "generally reduced." Among them, the interest rate of five-year deposits broke "3", the interest rate of five-year savings time deposit was lowered from 3.00% to 2.80%, and the interest rate of five-year time deposit for corporate was reduced from 3.25% to 2.55%; The interest rate on three-year savings deposits was lowered from 2.90% to 2.80%, and the interest rate on three-year corporate time deposits was lowered from 2.75% to 2.55%. The one-day call deposit rate broke "1" and was lowered from 1.00% to 0.90%.

The pace and extent of the adjustment of the deposit interest rate by the Jingyu Qianfeng Village and Township Bank is a microcosm of the current small and medium-sized banks following up with the national banks in adjusting the deposit interest rates.

It is worth mentioning that the reduction of deposit interest rates by small and medium-sized banks is mainly aimed at long-term deposits such as three-year and five-year deposits, and even "inverts" the interest rates of long and short terms.

For example, the adjustment of the deposit interest rate by the Zhongyuan Village Bank in Suiping, Henan Province, on October 14 was the third announcement on the adjustment of the deposit interest rate issued by the bank this year. The annual interest rate on five-year deposits has been cut by 45 basis points so far this year, from 2.65% to 2.2%.

For another example, the Qionghai Xingfu Village Bank in Hainan issued an announcement to adjust the interest rates of deposits of various maturities from October 14, and the implementation interest rates of three-year and five-year lump sum deposit and withdrawal time deposits were reduced from the original 3% to 2.5% and 2% respectively, with a reduction of 50 basis points and 100 basis points respectively.

Since the beginning of this year, Qionghai Xingfu Village Bank has lowered its deposit interest rate three times, mainly for long-term deposit products. Among them, at the end of January this year, the bank lowered the listed interest rate of five-year lump sum deposit and withdrawal time deposit from 3.4% by 30 basis points to 3.1%. So far, in less than a year, the bank's five-year lump sum deposit has not only broken "3", but also lowered 110 basis points to the critical point of "2", which is also lower than the product interest rate for the next three years.

According to the Chinese reporter of the brokerage, since October, Shanxi Hunyuan Rural Commercial Bank, Xinjiang Fukang Jinhui Village Bank, Xinjiang Oasis National Village Bank, Xinjiang Changji Rural Commercial Bank, Shanxi Fenyang Jiudu Village Bank, Jilin Baishan Hunjiang Hengtai Village Bank, Shanghai Qingpu Huijin Village Bank, Heilongjiang Hailun Huifeng Village Bank, and Yunnan Qujing Yixingfu Village Bank have issued announcements on adjusting RMB deposit interest rates.

In the past three months, small and medium-sized banks have followed suit

Since 2022, large state-owned banks and joint-stock banks have carried out five relatively concentrated deposit listing price reductions in September 2022, June and September 2023, December 2023, and July 2024 respectively.

The adjustment stems from the PBOC's 10bp cut to 3.35% for the one-year LPR and 10bp to 3.85% for the 5-year LPR on July 22, 2024. In order to cope with the pressure of the gradual narrowing of net interest margins, domestic national commercial banks have made adjustments on the liability side in the following days and collectively lowered the interest rates on deposits.

Specifically, on July 25 this year, the six major banks of the Industrial and Commercial Bank of China, the Agricultural Bank of China, the Bank of China, the Construction Bank, the Bank of Communications and the Postal Savings Bank simultaneously released the latest deposit listed interest rates, reducing the demand deposit interest rate by 5 basis points to 0.15%, the one-year deposit (lump sum deposit) interest rate by 10 basis points to 1.35%, and the two-year, three-year, and five-year deposit (lump sum deposit) interest rates were all reduced by 20 basis points to 1.45%, 1.75%, and 1.80%. Subsequently, 12 joint-stock banks also followed up with the corresponding deposit interest rates, and the reduction was synchronized with the large banks: the fixed deposit interest rate of less than one year was reduced by 10 basis points, and the fixed deposit interest rate of more than one year was reduced by 20 basis points.

This is the fifth round of concentrated deposit interest rate cuts by domestic commercial banks since the establishment of the market-oriented adjustment mechanism for deposit interest rates in April 2022. Among them, the demand deposit interest rate was lowered by 5 basis points to 0.15%, which is the first adjustment of the demand deposit interest rate since mid-June last year.

It can be observed that following the interest rate cuts of the above-mentioned mainstream banks, in the past three months, small and medium-sized banks have followed suit.

According to incomplete statistics from brokerage China reporters, in August, Jingmen Rural Commercial Bank, Hejin Rural Commercial Bank, Baoying Rural Commercial Bank, Huadian Rural Commercial Bank, Hubei Zaoyang Rural Commercial Bank, Guangxi Pingnan Guiyin Village Bank, Xinyang Pingqiao Zhongyuan Village Bank and other small and medium-sized banks also issued announcements on reducing deposit interest rates. In September, Yunnan Shiping Beiyin Village Bank, Dongxing National Village Bank, Xinjiang Bank, Laishan Qifeng Village Bank, and Xinyang Zhujiang Village Bank also followed the pace of reducing deposit interest rates and lowered deposit interest rates for some maturities.

Deposit rates may continue to be cut in the future

Through the analysis of the liabilities of commercial banks, it can be found that the deposits of many banks account for more than 70% of their interest-bearing liabilities. In recent years, with the cold of real estate and the impact of the epidemic, individual and corporate customers have pursued more capital security, reduced investment and increased savings.

The so-called "fixed-term" of deposits, that is, the demand to fixed deposits of individual or corporate banks has increased, the proportion of fixed deposits has increased, and the proportion of demand deposits has decreased.

Compared with the same period last year, the proportion of personal time deposits and corporate time deposits at the end of June 2024 increased by 2.7 percentage points and 0.4 percentage points respectively, and the proportion of demand deposits decreased. Compared with the end of 2023, the proportion of personal time deposits and corporate time deposits at the end of June 2024 increased by 1.5 percentage points and 0.1 percentage points respectively.

(Source: Western Securities Research Report)

It can be seen that in the past two years, with the narrowing of interest rate spreads and the decline of LPR, how to reduce the cost of debt has been a high-frequency topic for banks in the quarterly earnings briefing. Some banks have taken the initiative to adjust the size, structure and price of deposits, which has alleviated the pressure on operating costs caused by the regularization of deposits.

Due to the relatively high proportion of long-term deposits in some banks, there is still room for further reduction of deposit interest rates in order to alleviate the continued pressure on net interest margins under the influence of the downward trend in loan pricing.

Recently, the six major state-owned banks of industry, agriculture, China, construction, communications, and postal savings, as well as 12 joint-stock banks, collectively issued an announcement on the operation of adjusting the interest rate of existing housing loans in batches. After the above-mentioned national banks issued relevant rules, hundreds of local banks followed up one after another, and issued announcements on the detailed rules for reducing the interest rates of existing housing loans in batches, and most of them will adjust the increase in the amount of LPR higher than "30bp" to "30bp" by the end of October.

Many market views believe that the linkage between deposit and loan interest rates has been strengthened, a new round of interest rate cuts may continue to come, and the deposit cost of commercial banks is expected to fall further.

Editor-in-charge: Yang Yucheng

Proofreading: Wang Jincheng