The pace of deposit rate cuts for small and medium-sized banks accelerates

Since April, multiple city commercial banks and rural commercial banks have repeatedly cut deposit rates in quick succession. Specifically, the rate cuts cover mainstream products such as time deposits and call deposits. The amount of the cuts ranges from a few to dozens of basis points, and the pace of the cuts has clearly accelerated. In recent years, the deposit cost ratio of regional mid- and small-sized banks has been declining year by year, and net interest margins have gradually stabilized. Some banks’ 2025 deposit cost ratio has already fallen into the “one-something” range, and the year-over-year decline has further widened. Several industry insiders analyze that net interest margins in the banking sector are currently at a historic low, and going forward, deposit rate adjustments may continue in a pattern of small, gradual changes with differentiation in structure; the interest-rate center of gravity will still move steadily downward. (China Securities Journal)