Mid-sized and small banks once again trigger a "rate-cutting wave," with some five-year interest rates lowered by as much as 30 basis points

After the Spring Festival, as the peak of “opening the door for a good start” to attract deposits gradually subsides, the domestic banking industry is entering a new round of deposit interest rate cuts. This round of reductions was led by city commercial banks, rural commercial banks, and village banks, with adjustments ranging from 5 to 30 basis points. Some banks have cut the five-year fixed deposit interest rate by as much as 30 basis points.

On March 6, Xinjiang Bank announced that starting from the 10th, it would adjust its listed RMB deposit rates. The interest rates for savings deposits, fixed deposits, negotiated deposits, and notice deposits all saw reductions, with the maximum cut of 15 basis points (BP). Specifically, the interest rates for savings deposits and fixed deposits of three years or less generally decreased by 10 BP, while the five-year fixed deposit rate was cut by 15 BP. Additionally, negotiated deposits and 7-day notice deposits were both reduced by 10 BP, and the 1-day notice deposit rate was lowered by 5 BP.

Looking at the adjusted rates, the bank’s listed interest rate for savings deposits has fallen to 0.05%, the six-month term deposit rate to 0.95%, and the listed rates for 1-year, 2-year, 3-year, and 5-year fixed deposits are 1.15%, 1.25%, 1.35%, and 1.35%, respectively.

Recently, Shanghai Huarui Bank also adjusted its two-year, three-year, and five-year fixed deposit rates to 1.95%, 2.00%, and 1.95%, respectively, each down by 5 basis points. The two-year and five-year rates have officially dropped below the “2% mark.”

Additionally, Yunnan Yuanjiang North Rural Bank announced that starting March 1, the five-year fixed deposit rate was reduced from 2.2% to 1.9%, a decrease of 30 basis points, making it one of the banks with the largest cut in this round.

Notably, after the adjustments, some banks have experienced “inverted” deposit rates. Shanghai Huarui Bank’s three-year rate of 2.00% is higher than the five-year rate of 1.95%. Heilongjiang Youyi Rural Commercial Bank’s three-year fixed deposit rate was adjusted to 1.75%, while the five-year rate is only 1.6%.

From the collective rate cuts by state-owned banks in May 2025, followed by multiple rounds of adjustments by small and medium-sized banks, to the current new round of reductions after the Spring Festival, the market-oriented adjustment mechanism for bank deposit rates continues to play a role.

As of now, the overall listed deposit rates of small and medium-sized banks remain higher than those of large banks but are gradually aligning with state-owned banks. Since the large banks’ rate cuts in May last year, the listed interest rate for savings deposits has fallen to 0.05%, and the listed rates for three-year and five-year fixed deposits are 1.25% and 1.30%, respectively.

Recently, the overall trend in bank deposit rates has been downward, and the net interest margin of the banking industry remains under pressure.

According to data from the Financial Regulatory Administration, as of the end of Q4 2025, the net interest margin of commercial banks was 1.42%, at a historic low.

CITIC Securities predicts that in 2026, the net interest margin of the banking industry will narrow by about 4 basis points, marking the first single-digit annual decline since 2022. Kaiyuan Securities also expects that listed banks’ net interest margins will slightly narrow by around 4 basis points this year, with most of the pressure concentrated in the first half of the year. Zheshang Securities believes that this year, the interest margin of listed banks is expected to first decline and then stabilize, with a significantly narrower decline compared to previous years.