China’s major commercial banks cut deposit rates again
Major Chinese banks have cut their deposit rates, a move that could help ease pressure on lenders’ profits.
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. Local media reported Friday that Pan said it will cut the seven-day reverse repo rate by 20 basis points.
The loan prime rate, which will be announced Monday, is also expected to fall by 20 to 25 basis points, local media cited the PBOC governor as saying.
Write to Tracy Qu at tracy.qu@wsj.com
topics
