China’s major commercial banks cut deposit rates again

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Subscribe to enjoy similar stories. China’s major commercial banks have cut their deposit rates for a second time this year, a move that could help ease pressure on lenders’ profits after officials lowered mortgage and lending rates as part of efforts to boost the economy. Industrial & Commercial Bank of China and China Construction Bank Corp.

and other big lenders cut the interest offered on one-two-, three- and five-year time deposits by 25 basis points, according to their respective websites. Shares of ICBC were down 0.5% in morning trade, while CCB shares were 0.85% lower. That comes in the wake of a broader economic stimulus package that Chinese officials announced last month, which included a string of easing measures like cuts to benchmark rates and a reduction in reserve requirements for banks to encourage lending.

Prior to Friday’s news, the central bank’s governor, Pan Gongsheng, had said that a further 20- to 25-basis-point reduction to deposit rates would be made. The move marks the latest step in a deposit-rate cut cycle that began in late 2022. Chinese lenders lowered deposit rates three times last year, and once more this July.

The country’s major state-owned banks have been under pressure, with margins thinning under the weight of weak credit demand, a sluggish economy and aggressive monetary easing. Official data showed that the sector’s net interest margins stood at 1.54% at the end of second quarter, the same level as the first quarter but down from 1.74% a year ago. The PBOC has signaled that it will press on with easing measures.