Multiple banks collectively cut deposit product interest rates

Recently, many small and medium-sized banks have lowered deposit product interest rates, and some banks have even experienced an “inverted” phenomenon where long-term deposit rates are lower than short- and medium-term rates.

Since March this year, several small and medium-sized banks, including Liaoning Zhenxing Bank, Heilongjiang Youyi Rural Commercial Bank, and Shanghai Songjiang Fuming Village Bank, have reduced deposit interest rates, including for demand deposits and fixed-term deposit products of various maturities.

Notably, after this adjustment, some small and medium-sized banks have shown an “inverted” situation where long-term deposit rates are lower than short-term rates. For example, Heilongjiang Youyi Rural Commercial Bank’s latest five-year fixed deposit rate is 1.6%, lower than its three-year fixed deposit rate of 1.75%. I also noticed that before this wave of rate cuts among small and medium-sized banks, some large banks, including China Construction Bank, also had deposit product rates that were inverted.

Experts analyze that the recent rate cuts by small and medium-sized banks are a strategy to stabilize net interest margins under the current moderately loose monetary policy. The “inversion” of deposit rates reflects banks’ detailed liability management.

_ Zeng Gang, Deputy Director of the National Financial and Development Laboratory:_ Banks generally expect that future interest rates still have room to decline, so they are reluctant to lock in long-term deposits at higher costs now. Instead, they guide depositors to choose shorter-term deposit products. Additionally, banks need to ensure short-term liquidity supply, so they keep short-term deposit rates relatively high.

Industry insiders believe that, against the backdrop of promoting a decline in overall social financing costs and pressure on banks’ net interest margins, banks may continue to lower deposit rates.

_ Lou Feipeng, researcher at China Postal Savings Bank:_ For investors, it is necessary to consider their own investment experience, ability, risk appetite, and expected returns to reasonably allocate their assets. Diversifying assets can better balance risk and return. However, during this process, attention should be paid not to blindly pursue high returns and fall into high-interest guaranteed principal financial traps.