Small and medium-sized banks initiate a new round of deposit listing interest rate adjustments

◎ Reporter Chen Jiayi

With the conclusion of the “first-quarter windfall,” many small and mid-sized banks have begun a new round of adjustments to their deposit quotation interest rates. Jilin Bank, Xiamen Bank, Fujian Strait Bank, and others have issued announcements in recent days to cut the deposit quotation interest rates for certain maturities. Previously, banks’ deposit quotation interest rates had already undergone multiple rounds of reductions.

Analysts say that after the “first-quarter windfall” stage ended at the start of the year, combined with continued pressure on net interest margins, banks have entered a window period focused on centralized management of liability costs. It is expected that adjustments to deposit quotation interest rates will still continue, and the overall trend is one of gradual easing toward stabilization, with differentiation in structure. In the low-interest-rate era, interviewees suggest that individual investors should adopt a diversified asset-allocation approach to balance returns and risk.

Many banks cut deposit rates

On April 1, Jilin Bank issued an announcement to adjust its RMB deposit quotation interest rates. Among them, for three-year term deposit products, the annualized interest rate was cut by 5 basis points, from 1.75% to 1.70%. After the adjustment, the interest-rate inversion gap between the bank’s three-year and five-year fixed-term deposit rates narrowed to 10 basis points.

Xiamen Bank announced that, effective April 1, it would adjust the quotation interest rates of certain retail deposit products, cutting the quotation interest rates for one-day and seven-day notice deposits by 5 basis points each, bringing them down to 0.6% and 0.9%, respectively. Fujian Strait Bank also announced recently that, effective March 27, it would adjust the quotation interest rates for agreement deposits and one-day notice deposits, and that, effective April 1, it would adjust the quotation interest rate for seven-day notice deposits.

What’s more, some banks reduced deposit quotation interest rates multiple times within a short period. For example, Xiamen Bank previously reduced the quotation interest rates for personal one-year, three-year, and five-year deposits with interest withdrawal and one-day notice deposits on March 27, with reduction amounts of 10 basis points, 20 basis points, 20 basis points, and 5 basis points, respectively.

Nanjing Pukou Jingfa Rural Bank made three adjustments to its RMB deposit quotation interest rates in March. Specifically: starting March 2, the deposit interest rates for the bank’s corporate and personal three-year and five-year deposits were adjusted from 2.2% to 1.88%; starting March 9, the interest rate for personal one-year deposits was adjusted from 1.85% to 1.65%, while the interest rates for corporate and personal two-year deposits were adjusted from 1.8% to 1.65%; and starting March 20, it adjusted across the board the interest rates for personal and corporate fixed-term deposits from three months to five years.

“Stabilizing” the interest-margin gap by controlling liability costs

Regarding the dense adjustments by multiple banks to deposit quotation interest rates, analysts say: On the one hand, with the conclusion of the “first-quarter windfall,” banks have refocused on controlling liability costs and reduced deposit rates that had been temporarily raised during that period. Tian Lihui, a professor of finance at Tianjin University of Finance and Economics, said in an interview with a reporter from Shanghai Securities News that after the “first-quarter windfall” concluded, banks completed their phased deposit-raising tasks, and the downward pressure on deposit rates that had been temporarily suppressed to drive scale during the sprint period has now been released in a concentrated manner. On the other hand, amid pressure on net interest margins, lowering deposit rates has become a common choice across the banking industry to stabilize net interest margins.

“Currently, China’s banking industry net interest margins are at a low level. Many small and mid-sized banks are cutting deposit rates to reduce liability costs and stabilize net interest margins, which also helps banks improve the sustainability of serving the real economy.” Lou Feipeng, a researcher at China Postal Savings Bank, told reporters.

At present, it is the season for annual report disclosures. Several listed banks have mentioned in earnings briefings or annual reports that net interest margins are expected to stabilize. On March 27, Yao Mingde, vice president of Industrial and Commercial Bank of China, said at the 2025 annual performance press conference that it expects the decline in net interest margins this year to further converge compared with 2025. “In the short term, the downtrend in net interest margins has not changed, but favorable factors for improving net interest margins are continuing to accumulate, and the trend toward marginal stabilization is expected to continue.”

Future deposit rates may continue to be adjusted

If we look at a longer time horizon, the fact that deposit rates have been reduced is undeniable. Looking ahead, analysts generally believe that future adjustments to deposit rates may show a trend of gradual easing toward stabilization, with differentiation in structure.

Tian Lihui said: On the one hand, in 2026, a batch of high-interest time deposits will mature in a concentrated way, and banks’ interest-paying costs are expected to improve significantly. On the other hand, net interest margins are already at a historical low, leaving limited room for further sharp narrowing. Therefore, the room for deposit rates to keep falling is relatively limited overall, and the trend will be characterized by rate declines becoming more of a gentle slope, increasing differentiation by structure, and more refined pricing.

Wang Pengbo, a senior analyst at Beacon Analysis (Bonton Analysis), expects that future adjustments to deposit quotation interest rates will continue with small incremental steps and differentiated structure. Overall, the interest-rate “center of gravity” will continue to move steadily downward; the spread between short- and long-term tenors will narrow somewhat, and the phenomenon of rate inversion may become more common. Under the guidance of regulatory policy, interest rates will not experience disorderly declines or predatory deposit-attracting behavior, nor will there be a cliff-like drop. For small and mid-sized banks, the size of adjustments is likely to remain greater than that of state-owned large banks. There is still room to lower the interest rates of long-term deposit products, and banks’ liability mix will gradually tilt toward short- and medium-term.

With deposit rates being continuously reduced, the era of “earning while lying back” from deposits has already ended. Industry insiders suggest that investors can make diversified asset allocations according to their own risk tolerance. Wang Pengbo said that against the backdrop of decreasing attractiveness of deposits, individual investors are better suited to adopt a tiered allocation approach to balance returns and liquidity.

Tian Lihui also believes that individual investors can consider building a tiered allocation structure of “cash management + fixed income + middle-to-low volatility equity.” The core principle is that investors should accept the reality of low interest rates, replace single savings with diversified allocation, and replace a capital-protection mindset with risk management.

(Editor: Qian Xiaorui)

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